Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/46539
Authors: 
Arachi, Giampaolo
Bucci, Valeria
Year of Publication: 
2010
Series/Report no.: 
CESifo working paper: Public Finance 3261
Abstract: 
This paper provides further empirical evidence on the relationship between taxes and financial reporting by focusing on accounting decisions to write-offs equity investments. The analysis is based on panel data for Italian companies. In the period 1998-2006 the Italian corporate income tax has been reformed several times. In particular the tax deductibility of write-offs of equity investment was repealed in 2004. The paper exploits the ensuing high cross-sectional and times series variation in the marginal tax rate to identify tax effects. The econometric analysis delivers strong evidence that taxes affect the probability of write-offs. In contrast there is no evidence that taxes affect the magnitude of the write-offs. The paper also tests for the existence of a trade-off between tax minimization and non tax costs such as financial reporting costs and agency costs. Surprisingly, the evidence of such trade-off is rather weak.
Subjects: 
corporate taxation
write-offs of equity investments
financial reporting
tax planning
JEL: 
H25
H32
K34
M41
Document Type: 
Working Paper

Files in This Item:
File
Size
181.25 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.