The Effect of Corporate Tax Avoidance on the Cost of Equity

• Main Authors: GOH, Beng Wee, LEE, Jimmy, LIM, Chee Yeow, SHEVLIN, Terry J.
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2016
• Subjects: Tax avoidance; tax planning; cost of equity; Accounting; Corporate Finance
• Online Access: https://ink.library.smu.edu.sg/soa_research/1511; https://ink.library.smu.edu.sg/context/soa_research/article/2538/viewcontent/Effect_of_Corporate_Tax_Avoidance_on_the_Cost_of_Equity_av.pdf
• Institution: Singapore Management University

Based on Lambert, Leuz, and Verrecchia (2007)'s 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, perma...