empirical tax strongresearchstrong in accounting.ppt

The Interplay Between Taxes and Financial Accounting Research  Sydney G. Winter Lecture in Accounting October 2006 Terry Shevlin Outline of talk Academic accounting research in taxation – what does this mean? Empirical tax research in accounting – the Shackelford/Shevlin review piece (with some updating) Taxes and asset (stock) prices - dividend tax capitalization, still an important area Book-tax differences and recent research My objective: what can financial accounting empiricists learn from some (recent) tax research. Academic accounting research in taxation – what does this mean? All methodologies can be found in tax research Archival (empirical) Behavioral or JDM Analytical Experimental markets Legal General overview of accounting tax research Most tax research can be classified either as Tax planning Tax policy Tax Compliance (but not mutually exclusive) Tax planning vs tax policy research Tax planning vs tax policy : Descriptive vs prescriptive Tax planning – how do firms react to tax law changes – or what effect do taxes have on economic entities – is descriptive. Why of interest – how will economic agents react to proposed tax law/policy changes? Notice the similarity to much financial accounting research – is descriptive or positive research so as to provide relevant data to policy makers so that they (FASB, SEC, Treasury) can (hopefully) make more informed choices Tax compliance research Mainly JDM, but some analytical and some empirical What role tax preparers in the tax return area as tax planners, as educators of taxpayers What incentives do tax preparers face and what effect does this have on compliance (aggressive positions?) What role IRS audits on compliance? What role penalties vs increased education on compliance? Hypotheses generated from equity theory, prospect theory, and more generally from psychology field General overview - summary Note that tax policy research is often going to be more techni