Search Results (14)

Temporary book-tax differences (BTDs) serve as critical proxies for understanding corporate earnings management and tax planning. However, the drivers of large negative BTDs (LNBTDs)—where book income falls below taxable income—remain underexplored. This study investigates the determinants and components of LNBTDs, focusing on their relationship with deferred tax assets (DTAs) and liabilities (DTLs). Utilizing hand-collected data from the tax disclosures of S&P 500 firms’ 10-K filings (2007–2023), I analyze 4685 firm-year observations to identify specific accounting items driving LNBTDs. Findings reveal that deferred revenue, goodwill impairments, R&D, CapEx, environmental obligations, pensions, contingency liabilities, leases, and receivables are significant contributors, often generating substantial DTAs due to timing mismatches between book and tax recognition. Notably, high-tech industries, like the pharmaceutical, medical, and computers and software industries, exhibit pronounced LNBTDs, driven by upfront revenue recognition for tax purposes and deferred recognition for financial reporting, capitalization, amortization and depreciation effects, and other deferred tax components. Regression analyses confirm strong associations between these components and LNBTDs, with asymmetry in reversal patterns suggesting that initial differences do not always offset symmetrically over time. While prior research emphasizes large positive BTDs and tax avoidance, this study highlights economic and industry-specific characteristics as key LNBTD drivers, with limited evidence of earnings manipulation via deferred taxes. These insights enhance the value relevance of deferred tax disclosures and offer implications for reporting standards, tax policy, and research into BTD dynamics. Full article

The simplified tax system is the most common special tax regime in the Russian Federation in terms of the number of taxpayers. Tax revenues from the simplified tax system account for 6% of the structure of tax revenues of the consolidated budgets of the constituent entities of the Russian Federation and more than 93% of the structure of tax revenues from special tax regimes. The purpose of this study is to identify and assess the factors influencing tax revenues from the tax levied in connection with applying the simplified system of taxation (taxable object—income reduced by the amount of expenses). The objective of this study is to determine a set of factors used by economists to model the level of tax revenues and to conduct a corresponding econometric analysis of the influence of the selected factors on the dependent variable to identify characteristics of the simplified taxation system functioning in the Russian Federation. The object of this study is the per capita tax revenue from the tax levied in connection with applying the simplified system of taxation (the object of taxation is income reduced by expenses) in the Russian Federation. The subject of the research is a set of economic relations, which arise because of tax-legal relations between tax authorities and taxpayers in relation to the calculation of the tax levied in connection with the application of the simplified taxation system. This study’s hypothesis is that the amount of tax revenues is influenced by factors characterizing the economic situation and development of small and medium businesses in the constituent territories of the Russian Federation. This study was conducted in 83 constituent territories of the Russian Federation in 2020–2022. The research methods are statistical analysis and econometric modeling on panel data. During this study, six econometric models were constructed. Based on the results of specification tests, the least squares dummy variables model was selected. The results of the modeling show that the tax rate, the number of taxpayers, and the real average per capita monetary income of the population have a statistically significant impact on the per capita tax revenue under the simplified tax system (the object of taxation is income reduced by the number of expenses). As a result, the focus of economic policy at both macro and meso levels should be on the support of small and medium-sized enterprises in the early stages of their life cycle, as well as on the increase of the purchasing power of the population. Based on the results obtained, it is possible to forecast the revenue side of the budgets of the constituent entities of the Russian Federation. Full article

Texas has abundant natural resources, making it a good place for renewable energy facilities to build. Unfortunately, property taxes are the highest tax on an incoming renewable energy facility in the state. In order to increase renewable energy in the state, Texas tax code Chapter 313 was introduced. Chapter 313 allows school districts the opportunity to offer a 10-year limit, ranging from USD 10 million to USD 100 million, on the taxable value of a new green energy project. With Chapter 313 ending in 2022, the following question is raised: how do tax incentives that increase the number of applications for producing renewable energy in Texas impact the wholesale, real-time pricing of electricity in the state? Skew-t regression models were implemented on a large dataset, focusing on the designated North, Houston, and West regions of the Electricity Reliability Council of Texas (ERCOT), since these regions account for 80% of the state’s energy consumption. Analysis focused on the hours ending at 3 AM, 11 AM, and 4 PM, due to the ERCOT’s time-of-day pricing. Three key findings related to the above question resulted. First, tax incentives that increase the number of active wind and solar facilities lead to a statistically significant (p < 0.0001) reduction in wholesale electricity price (USD/MWh), ranging between 2.31% and 6.6% across the ERCOT during different hours of the day. Second, for a 10% increase in tax-incentivized green energy generation, during a 24-hour period, there is a statistically significant (p < 0.0001) reduction in the generation cost (USD/MWh), ranging between 0.82% and 1.96%. Finally, electricity price reductions from solar energy are much lower than those from wind generation and/or are not statistically significant. Full article

The trends in the prevalence of atopic dermatitis for each prefecture over recent years have not been investigated in Japan, and no studies investigating the factors associated with the prevalence using nationwide data have been conducted. We investigated the trends in the prevalence of atopic dermatitis among schoolchildren for each prefecture in Japan from 2006 to 2018 and identified the factors associated with regional differences in prevalence. The data on the atopic dermatitis prevalence in schoolchildren aged 6–17 years were collected as part of the School Health Statistics Research. The demographic, socioeconomic, medical, and environmental characteristics of the prefectures were examined for possible associations with the prevalence. The age-standardized prevalence rates of atopic dermatitis were calculated separately for boys and girls and by prefecture and year. We examined the associations between the age-standardized prevalence rates and prefectural characteristics using an ecological study. The age-standardized prevalence rates of atopic dermatitis tended to be stable for Japan as a whole, whereas the trend in the age-standardized prevalence rates differed across prefectures. In the regression analysis, the year was negatively associated and the number of medical clinics per 100,000 persons was positively associated with the age-standardized prevalence in girls. The taxable income per capita was positively associated with the age-standardized prevalence both in boys and in girls. Full article

Geographical differences in chronic obstructive pulmonary disease (COPD) mortality have not been determined using municipal-specific data in Japan. This study determined the geographical differences in COPD mortality in Japan using municipal-specific data and identified associated factors. Data on COPD mortality from 2013 to 2017 for each municipality were obtained from the Vital Statistics of Japan. We calculated the standardized mortality ratio (SMR) of COPD by an empirical Bayes method for each municipality and located the SMRs on a map of Japan. In addition, an ecological study was conducted to identify factors associated with the SMR using demographic, socioeconomic, and medical characteristics of municipalities by a spatial statistics model. Geographical differences in the SMR were different in men and women, and municipalities with a low SMR tended to be more frequent in women. Spatial regression analysis identified that the total population and taxable income per capita were negatively associated with the SMR in men. In women, population density, the proportion of fatherless households, and the number of clinics per capita were positively associated with the SMR, whereas taxable income per capita was negatively associated with the SMR. There were some differences in regional characteristics associated with COPD mortality by sex. Full article

Despite the growing body of literature on the dependence of economic growth from different factors, the reasons for uneven growth remain unclear. Within the country, regions have different growth rates in their diverse parts. It is unclear why the same factor could influence municipalities differently. To reveal this reason, we used hierarchical linear modeling with spatial dependence, which allows us to decompose variation into regional and municipal scales and take into account spatial autocorrelation. We conducted our research on data for 2239 municipalities within 85 Russian regions in 2019. Our model incorporates 20 factors of economic growth, with 7 at the municipal scale. Cross-interaction estimates established that factors attributed to the regional level determined the relationship between dependent variables (growth rate of production, growth rate of social benefits, and taxable income) at the municipal level and predictors. The influence of initial level, investments in fixed assets, employment on municipal growth varies greatly depending on such regional determinants as economic structure, innovation, human capital, and inequality. This paper adds to the existing literature on uneven economic growth at a smaller scale (municipality) and at the same time helps to rethink inter- and intra-regional disparities. Full article

The advancement in fintech technological development in emerging countries has accelerated the role of digital finance in economic development. Digital finance assists in financial inclusion; however, it may also increase the chances of financial instability due to systematic risks. Emerging countries are also in the clutches of shadow economic growth, which reduces taxable income revenue and creates pressure on financial inclusion prospects. The current study attempts to measure the impact of digital finance on the shadow economic growth and financial stability among the selected South Asian emerging countries. We have used the CUP-FM and CUP-BC estimation methods to measure the above relationship on two model frameworks from 2004 to 2018, with the former measuring the influence of digital finance on the shadow economy and the latter examining the relationship between digital finance and financial stability. In addition, the second-generation unit root test, and the Westerlund cointegration analysis are also employed to confirm the stationarity and cointegration among the variables. The result of the Westerlund’s cointegration confirms a long cointegration between the explanatory and outcome variables. Furthermore, the long-run estimation results conclude that an increase in digital finance helps in reducing the growth of the shadow economy among the selected sample countries. However, it also increases the likelihood of systematic risks and increases financial instability. The study also reveals that the control variables like unemployment and industrial productivity also have a significant influence on financial stability and the shadow economy. The findings will assist readers in comprehending how digital finance influences the shadow economy and promotes financial inclusion and stability in emerging nations. Full article

This study investigated the R&D manipulation of Chinese listed companies under preferential tax policies based on the bunching approach. On this basis, differences in organizational performance aspirations were used to distinguish firm heterogeneity. This was to clarify how tax incentives affected firm innovation performance. The empirical results show that preferential tax policies can effectively reduce the actual tax burden of high-tech enterprises. Some companies have enjoyed corporate income tax breaks by manipulating R&D spending. The counterfactual estimate of R&D intensity shows that the elasticity of taxable income of R&D investment of listed companies in China is between 0.55 and 0.8. The elasticity of taxable income of manufacturing enterprises is between 0.6 and 0.75. Furthermore, within the R&D operating range, firm-level variations will affect innovation performance. The incentive effect of R&D activities of enterprises with a negative organizational performance aspiration gap is higher than that of enterprises with a positive organizational performance aspiration gap. The conclusion provides the basis for the country to improve preferential tax policies for high-tech enterprises. Full article

A recent stream of research has focused on tax aggressiveness, the downward management of taxable income through tax planning activities, and has analyzed its antecedents and consequences, mainly on public companies. Only very few studies, however, have been carried out in the context of private family business and have investigated whether some family firms are more tax aggressive than others, considering some specific features of family firms, such as their distinctive agency conflicts and socioemotional wealth. In this paper, we investigate the antecedents of tax aggressiveness in a sample of private Italian family firms. Our research findings show that tax aggressiveness is positively associated with ownership concentration, the presence of independent members in the board, and the adoption of reporting mechanisms. Instead, we found a negative relation between tax aggressiveness and the use of both strategic planning and a combination of managerial control systems (both planning and reporting mechanisms). We did not find any relation between family CEO and tax aggressiveness. In summary, overall, our findings show that family involvement in ownership, an independent board. and managerialization (the use of managerial mechanisms) are relevant antecedents of tax aggressiveness in private family businesses. Full article

We analyzed whether a firm’s engagement in socially responsible activities, as measured by environmental, social, and corporate governance (ESG) scores, influences their tendency to avoid tax in the Korean financial market. We found a negative relationship between Korean firms’ ESG scores and tax avoidance in terms of book-tax income difference during the sample period between 2011 and 2017. This result implies that firms with good CSR performance would tend not to manipulate taxable profits, which is in line with corporate culture theory. More interestingly, this trend has become more apparent for chaebol-affiliated firms, a special type of Korean conglomerate, than non-chaebol firms. Full article

A simple and effective lattice–gas–automaton (LGA) economic model is proposed for the income distribution. It consists of four stages: random propagation, economic transaction, income tax, and charity. Two types of discrete models are introduced: two-dimensional four-neighbor model (D2N4) and D2N8. For the former, an agent either remains motionless or travels to one of its four neighboring empty sites randomly. For the latter, the agent may travel to one of its nearest four sites or the four diagonal sites. Afterwards, an economic transaction takes place randomly when two agents are located in the nearest (plus the diagonal) neighboring sites for the D2N4 (D2N8). During the exchange, the Matthew effect could be taken into account in the way that the rich own a higher probability of earning money than the poor. Moreover, two kinds of income tax models are incorporated. One is the detailed taxable income brackets and rates, and the other is a simplified tax model based on a fitting power function. Meanwhile, charity is considered with the assumption that a richer agent donates a part of his income to charity with a certain probability. Finally, the LGA economic model is validated by using two kinds of benchmarks. One is the income distributions of individual agents and two-earner families in a free market. The other is the shares of total income in the USA and UK, respectively. Besides, impacts of the Matthew effect, income tax and charity upon the redistribution of income are investigated. It is confirmed that the model has the potential to offer valuable references for formulating financial laws and regulations. Full article

Background: The American family structure has changed in the past few decades due to a rise in the divorce rate and unmarried women with children. Research suggests a salary disparity between men and women, especially for those women after pregnancy. However, these studies were confined to individuals within traditional families, and there is a lack of information of income disparity and poverty status between single mothers and fathers. The current study explored the disparities in single-parent families based on the household income and the poverty status using a set of nationwide censor data. Methods: The current study used data from the 2011 and 2013 Panel Study of Income Dynamics (N = 1135). Multivariate regression models were used in the analysis. Results: The demographic characteristics of the weighted population showed that taxable income, total income, and poverty status were higher for single fathers than mothers, while non-work income was higher for single mothers than fathers. Single mothers were much more likely to be at the crisis category than single fathers. Multivariate analyses showed that gender, age, marital status, years of experience, and geographic region had effects on taxable income, and only gender, marital status, and region had effects on poverty status. Conclusions: The results suggest that vulnerable group of single mothers was acknowledged according to income and poverty status. Age, marital status, years of experience, and region would be the critical factors for predicting the income and poverty status for single parenthood. Full article

This study investigates the volatility of book income and taxable income, and their relevance to stock returns variability. Book income is recognized under the financial accounting principle whereas taxable income is determined on the basis of legal right. Thus, the two types of earnings can provide different sets of information to investors. Particularly related to the role of earnings as a risk measure, this study shows that book income is more volatile than taxable income, which indicates that taxable income is relatively more consistent and predictable. Further, the volatility of book income is strongly positively related to stock return variability while the taxable income volatility is insignificantly associated with the stock returns volatility. Additional analysis shows that the earnings volatility is more closely linked to the systematic risk of stock prices than the idiosyncratic risk. In conclusion, this study suggests that book income and taxable income is mutually different in terms of earnings variability and its relevance to firm risk. The findings also indicate that those two sets of earnings information are complementary to each other and provides investors with useful information to assess underlying firm risk. Full article

This study aims to examine if the firms in business groups avoid tax by related party transactions. If other conditions are the same, firms have an incentive to maximize after-tax profits by minimizing tax burden. If the firms are in business groups, they tend to minimize tax at the business group level. It is expected that the level of tax avoidance of both parties of related party transactions will be high if tax is minimized at the business group level as the transactions will be made at a level that can minimize the tax of both the firm that reduces the taxable income through related party transactions and the firm whose taxable income increases. In addition, the effect of being in a Chaebol business group and the effect of the Unfair Related Party Transactions Tax Law on the association with related party transactions and tax avoidance are also examined. According to this study, the firms in business groups avoid tax by related party transactions. It is also found out that tax avoidance by related party transactions is done more aggressively in Chaebol member firms than non-Chaebol firms, while tax avoidance by related party transactions in Chaebol business groups decreases after the implementation of the Unfair Related Party Transactions Tax Law. Full article