企业税收筹划外文翻译文献.docx

企业税收筹划外文翻译文献.docx

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企业税收筹划外文翻译文献

企业税收筹划外文翻译文献

（文档含中英文对照即英文原文和中文翻译）

Corporate Tax-PlanningEffectiveness:

TheRole of Compensation-Based

Incentives（Ⅰ）

JohnD.PhillipsUniversityofConnecticut

ABSTRACT

Thisstudyinvestigateswhethercompensatingchiefexecutiveofficersand

business-unitmanagersusingafter-taxaccounting-basedperformancemeasuresleadstolowereffectivetaxrates,theempiricalsurrogateusedfortax-planningeffectiveness.Utilizingproprietarycompensationdataobtainedinasurveyofcorporateexecutives,therelationbetweeneffectivetaxratesandafter-taxperformancemeasuresismodeledandestimatedusingatwo-stepapproachthatcorrectsfortheendogeneitybiasassociatedwithfirms'decisionstocompensatemanagersonapre-versusafter-taxbasis.Theresultsareconsistentwiththehypothesisthatcompensatingbusiness-unitmanagers,butnotchiefexecutiveofficers,onanafter-taxbasisleadstolowereffectivetaxrates.

KEYWORDS taxplanning; performancemeasures; endogenoustreatmenteffects.

I.INTRODUCTION

Effectivetaxplanning,definedbyScholesetal.（2002）astaxplanningthatmaximizesthefirm'sexpecteddiscountedafter-taxcashflows,requiresmanagerstoconsidertheirdecisions'after-taxconsequences.Inthispaper,Iinvestigatewhetherafter-taxaccounting-basedperformancemeasuresleadtolowereffectivetaxrates（ETR）,myempiricalsurrogatefortaxplanningeffectiveness.1TheETR,anincome-statement-basedoutcomemeasurecalculatedastheratiooftotalincometaxexpensetopre-taxincome,generallymeasurestheeffectivenessoftaxreductionstrategiesthatleadtohigherafter-taxincome.AlowerETR,however,canonlyproxyfortaxsavingsanddoesnotalwaysimplythatafter-taxincomeand/orcashflowshavebeenmaximized.2Despitethislimitation,theETRhasbeenusedtomeasuretheeffectivenessofspendingonthetaxfunction（Millsetal.1998）andcorporatetaxdepartmentperformance（Douglasetal.1996）.Also,loweringtheETRisfrequentlycitedasawaytoincreaseearnings（e.g.,Ziegler1997）andincreaseshareprice（e.g.,Mintz1999;Swenson1999）.

Accountingresearchhasaddressedtherelationbetweenaccounting-basedcompensationandmanagers'actions（e.g.,Larcker1983;Healy1985;Wallace1997）.Thispaperisthefirsttoaddresswhetherafter-taxaccounting-basedperformancemeasuresmotivatemanagerstotakeactionsthathelplowertheirfirms'ETRanddoessoatboththechiefexecutiveofficer（CEO）andbusiness-unit（SBU）managerlevels.

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Priorafter-taxperformancemeasureresearchhasfocusedonlyonthedeterminantsofcompensationCEOsusingpre-versusafter-taxearnings（e.g.,Newman1989;CarnesandGuffey2000;Atwoodetal.1998;Dhaliwaletal.2000）andprovidesnoevidenceconcerningafter-taxcompensation'seffectivenessinloweringafirm'staxliability.ExtendingthisinvestigationtotheSBUlevelismotivatedoutoftheapparentconflictbetweenargumentsthattaxesshouldbeallocatedto SBUforincentivecompensationpurposes（e.g.,McLemore1997）withempiricalobservationsthatamajorityoffirmsdonotdoso（e.g.,Douglasetal.1996）.4ThecurrentinvestigationprovidesevidenceconcerningtheincrementaleffectivenessofexplicitlymotivatingCEOsandSBUmanagerstoincorporatetaxconsequencesintotheiroperatingandinvestmentdecisions.

Acommonissueincross-sectionalstudiesthatattempttolinkaparticularmanagementaccountingchoicetoanoutcomemeasureisthatallsamplefirmsmaybeoptimizingwithrespecttothechoicebeinginvestigated（IttnerandLarcker2001）.Withoutaddressingtheendogeneityofafirm'schoice,itisdifficulttoprovideevidenceconsistentwiththischoiceleadingtoanimprovedoutcome.Toaddressthisissue,therelationbetweenETRandCEOand SBU-managerafter-taxperformancemeasuresisestimatedusingatwo-stepapproachthathelpscorrectforthepotentialendogeneitybiasassociatedwiththesetwochoicevariables.Asafirststepinimplementingthisapproach,theAntleandDemski（1988）controllabilityprincipleisusedtomodelafirm'sdecisionstoadoptafter-taxCEOandSBU-managerperformancemeasures.Toincludeaparticularmeasureinamanager'scompensationcontract,thisprinciplerequiresthattheexpectedbenefitsfromholdingamanagerresponsibleforameasuremustbegreaterthantheadditionalwagethatmustbepaidtocompensatethemanagerfortheresultingadditionalriskandeffort.Accordingly,anafter-taxperformancemeasureshouldbeusedasacontractingvariableinamanager'sincentivecompensationcontractonlyifthemanager'sinvolvementintax-planningeffortsleadstoadifferencebetweenpre-taxandafter-taxaccountingresults,whichisgenerallyreflectedintheETR.Consistentwithpriorresearch,thepre-versusafter-taxCEOandSBU-managerselecti