Abstract

We examine the impact of firms' geographic locations on their tax avoidance behavior. We consider urban firms as those headquartered in the top ten metropolitan statistical areas (MSAs) based on the 2000 census; all others are labeled non-urban firms. Using GAAP and cash-effective tax rates to proxy for tax avoidance, we report that non-urban firms have relatively higher tax avoidance levels. Our results are robust to propensity score matching, using alternative measures of geographic location, including additional control variables, and employing different regression specifications. Further analyses suggest that non-urban firms' tax avoidance appears to be value-increasing to shareholders. Overall, our study provides potential policy implications for the IRS.

Full Text

Published Version

Talk to us

Join us for a 30 min session where you can share your feedback and ask us any queries you have

Schedule a call

Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.