How Much Will Firms Pay for Earnings that Do Not Exist? Evidence of Taxes Paid on Allegedly Fraudulent Earnings

By Merle M. Erickson, Michelle Hanlon, Edward L. Maydew. 2004

401 citations recorded by the source corpus.

Subfields: Accounting, Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/b02de8cacc6b83d3caed561902f43828ee3df41f

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Citations in the corpus

Public Pressure and Corporate Tax Behavior (2016, neutral): “That firms may try to reduce their subsidiary disclosure requirements without affecting their tax expense, and therefore earnings, is important, especially in light of evidence that firms will undergo costs to avoid depressing earnings (Erickson et al. 2004).”
Incentives for Tax Planning and Avoidance: Evidence from the Field (2014, background): “…example, in many studies the researcher must estimate what the companies’ results would have looked like had an alternative action been taken (see Erickson et al. (2004) and Shackelford and Shevlin (2001) for discussions) and in some studies the sample size is small (Erickson et al. 2004)…”
Taxable Income, Future Earnings, and Equity Values (2004, background): “However, as tax-deductible goodwill arises only in acquisitions in which the tax basis of the targel's a.ssets is stepped up. which is rare for freestanding C corporations, mosi goodwill recognized since 1993 is nondeduetible (lor discussion, see Scholes el al.”
Do Firms Manage Earnings to Meet Dividend Thresholds (2008, neutral): “Because earnings management can lead to higher taxes being paid by the firm (Erickson et al., 2004) and, possibly, higher costs of capital (Francis et al.”
The Incentives for Tax Planning (2012, result): “Our results could also be construed as consistent with firms potentially forgoing cash savings to gain financial reporting benefits (e.g., Engel et al., 1999; Erickson et al., 2004).”
The association between book-tax conformity and earnings management (2014, neutral): “Second, Erickson et al. (2004) report that a small sample of firms accused of fraudulently overstating reported book income actually paid taxes on the overstated earnings to avoid detection.”
The Effects of Regulatory Scrutiny on Tax Avoidance: An Examination of SEC Comment Letters (2016, background): “8 Erickson, Hanlon, and Maydew (2004) provide some small-sample evidence that firms are willing to pay taxes on fraudulent earnings, presumably to avoid additional scrutiny.”
Taxable income as a performance measure: The effects of tax planning and earnings quality (2009, neutral): “In sum, results suggest that taxable income is particularly informative for firms overstating earnings, despite the fact that prior research finds that these firms also overstate taxable income (Erickson et al. 2004).”