The Accounting Review Vol. 93 No. 3 2018
Taxation and Corporate Risk-Taking
Abstract
We study whether the corporate tax system provides incentives for risky firm investment. We analytically and empirically show two main findings: first, risk-taking is positively related to the length of tax loss periods because the loss rules shift some risk to the government; and second, the tax rate has a positive effect on risk-taking for firms that expect to use losses, and a weak negative effect for those that cannot. Thus, the sign of the tax effect on risky investment hinges on firm-specific expectations of future loss recovery.
- DOI
- 10.2308/accr-51872
- Volume
- 93
- Issue
- 3
- Pages
- 237-266
- Language
- en
- Sources
- openalex bibtex:phds-export.bib crossref