The spread of aggressive corporate tax reporting: A detailed examination of the corporate-owned life insurance shelter

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62 Scopus citations

Abstract

This study investigates the spread of aggressive corporate tax reporting by modeling a firm's decision to adopt the corporate-owned life insurance (COLI) shelter. Prior studies identify firm characteristics associated with aggressive tax reporting (Desai and Dharmapala 2006; Frank et al. 2009) and tax shelter participation (Wilson 2009; Lisowsky 2010). This study examines whether social environment factors explain the pattern of tax shelter adoption. Building on theory related to the diffusion of innovations and institutional isomorphism, I hypothesize direct and indirect ties between prior and potential shelter adopters influence the spread of shelter use. I find that network ties via board interlocks increase the likelihood of adopting the COLI shelter. I also find weak evidence that COLI use spreads geographically. However, I find no evidence that the spread of COLI use is concentrated among a particular set of audit firms or industries.

Original languageEnglish (US)
Pages (from-to)23-57
Number of pages35
JournalAccounting Review
Volume86
Issue number1
DOIs
StatePublished - Jan 1 2011

Keywords

  • Board interlocks
  • Corporate reporting
  • Diffusion
  • Institutional isomorphism
  • Tax aggressiveness
  • Tax shelters

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

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