Essays on corporate tax planning

Abstract

This dissertation contains three contributions to corporate tax planning. The first article examines stock price reactions to news about corporate tax avoidance and tax evasion. An event study shows that tax evasion generally has a negative impact on the capital market, while news of tax avoidance leads for firms with a low tax risk to positive capital market reactions. The second article deals with the effects of negotiation strategies of tax auditors and tax advisers on tax base adjustments in the context of a tax audit. A three-step estimation model shows that negotiation strategies have a severe impact on tax base adjustments. Tax auditors can increase tax base adjustments by ten percentage points when opting for a competitive strategy instead of a neutral strategy. The third article deals with the tax-induced income shifting of corporations. The results imply that firms are shifting income from high marginal tax rate periods to low marginal tax rate periods. This effect is particularly pronounced for family firms. Furthermore, firms' real activities manipulation is negatively affected by firms' marginal tax rate.