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 language | English (US) |
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Pages (from-to) | 23-57 |
Number of pages | 35 |
Journal | Accounting Review |
Volume | 86 |
Issue number | 1 |
DOIs | |
State | Published - Jan 2011 |
Keywords
- Board interlocks
- Corporate reporting
- Diffusion
- Institutional isomorphism
- Tax aggressiveness
- Tax shelters
ASJC Scopus subject areas
- Accounting
- Finance
- Economics and Econometrics