Academic Journal

Proprietary Costs and the Reporting of Segment-level Tax Expense

Junfang Deng, Logan Steele, Dan Lynch and Fabio Gaertner "Journal of the American Taxation Association" American Accounting Association 26 pages 2021

https://doi.org/10.2308/JATA-19-002 Cite this Publication

Journal Details

Journal of the American Taxation Association, 2021 Vol. 43 Issue 1 Pages 1-26

Keywords

Accounting

Journal Article, Academic Journal

Overview

We examine whether proprietary costs of disclosure affect the reporting of segment-level tax expense. Current accounting rules for segment-level reporting afford managers significant discretion in what line items to report. We predict and find firms with higher proprietary costs of disclosure (i.e., higher tax avoidance) are less likely to disclose segment-level tax information. These results are stronger for firms that define business segments on a geographic basis, where disclosure could reveal tax expense information about specific tax jurisdictions, consistent with the proprietary cost hypothesis. Overall, our results suggest some managers potentially use discretion in current guidance to avoid segment-level disclosure of taxes when these disclosures have the potential to be detrimental to the firm.

Proprietary Costs and the Reporting of Segment-level Tax Expense

Journal Details

Keywords

Overview

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