TY  - SER
AU  - Wee Goh,Beng
AU  - Lee,Jimmy
AU  - Yeow Lim,Chee
AU  - Shevlin,Terry
TI  - The Effect of Corporate Tax Avoidance on the Cost of Equity
KW  - Contabilidad
KW  - Publicaciones seriadas
KW  - Finanzas corporativas
KW  - Legislación
KW  - Estados Unidos
KW  - Evasión de impuestos
N2  - Based on Lambert, Leuz, and Verrecchia's (2007) derivation of the cost of equity capital in terms of expected cash flows, we generate a testable hypothesis that relates tax avoidance to a firm's cost of equity capital. Using three broad measures of tax avoidance—book-tax differences, permanent book-tax differences, and long-run cash effective tax rates—to test our hypothesis, we find that the cost of equity is lower for tax-avoiding firms. This effect is stronger for firms with better outside monitoring, firms that likely realize higher marginal benefits from tax savings, and firms with higher information quality. Overall, our results suggest that equity investors generally require a lower expected rate of return due to the positive cash flow effects of corporate tax avoidance
ER  -