Kenan-Flager Business School
University of North Carolina-Chapel Hill
Campus Box 3490, McColl Building
Chapel Hill, NC 27599-3490
NBER Working Papers and Publications
|June 2006||Capital Gains Taxes and Asset Prices: Capitalization or Lock-In?|
with Zhonglan Dai, Douglas A. Shackelford, Harold H. Zhang: w12342
This paper examines the impact on asset prices from a reduction in the long-term capital gains tax rate using an equilibrium approach that considers both demand and supply responses. We demonstrate that the equilibrium impact of capital gains taxes reflects both the capitalization effect (i.e., capital gains taxes decrease demand) and the lock-in effect (i.e., capital gains taxes decrease supply). Depending on time periods and stock characteristics, either effect may dominate. Using the Taxpayer Relief Act of 1997 as our event, we find evidence supporting a dominant capitalization effect in the week following news that sharply increased the probability of a reduction in the capital gains tax rate and a dominant lock-in effect in the week after the rate reduction became effective. Nondivide...
Published: Zhonglan Dai & Edward Maydew & Douglas A. Shackelford & Harold H. Zhang, 2008. "Capital Gains Taxes and Asset Prices: Capitalization or Lock-in?," Journal of Finance, American Finance Association, vol. 63(2), pages 709-742, 04. citation courtesy of
|August 2005||The Changing Role of Auditors in Corporate Tax Planning|
with Douglas A. Shackelford: w11504
This paper examines changes in the role that auditors play in corporate tax planning following recent
events, including the well-known accounting scandals, passage of the Sarbanes-Oxley Act, and
regulatory actions by the SEC and PCAOB. On the whole, these events have increased the
sensitivity to and scrutiny of auditor independence. We examine the effects of these events on the
market for tax planning, in particular the longstanding link between audit and tax services. While
the effects are recent, they are already being seen in the data. Specifically, there has already been
a dramatic shift in the market for tax planning away from obtaining tax planning services from one's
auditor. We estimate that the ratio of tax fees to audit fees paid to the auditors of firms in the S&P
Published: Auerbach, Alan J., James R. Hines, Jr., and Joel B. Slemrod (eds.) Taxing Corporate Income in the 21st Century. Cambridge: Cambridge University Press, 2007.
|August 2002||How Prevalent is Tax Arbitrage? Evidence from the Market for Municipal Bonds|
with Merle Erickson, Austan Goolsbee: w9105
Although tax arbitrage is central to the literatures on tax capitalization, implicit taxes, and even capital structure, there is little empirical evidence of the extent to which firms actually engage in tax arbitrage. This paper provides some evidence on the topic by focusing on a simple and observable corporate arbitrage strategy in the market for municipal bonds. It poses a puzzle for the literature, however, in that we find little evidence of municipal bond tax arbitrage by non-financial corporations. The overwhelming majority of firms are not engaging in the arbitrage at all and even among those engaged in arbitrage, many firms do less than a safe-harbor amount allowed by the tax authorities. Such a pattern is consistent with the presence of both fixed and marginal (i.e., that depen...
Published: Merle Erickson & Austan Goolsbee & Edward Maydew, 2003. "How Prevalent is Tax Arbitrage? Evidence from the Market for Municipal Bonds," National Tax Journal, vol 56(1, Part 2), pages 259-270.
|June 1998||Coveting Thy Neighbor's Manuafacturing: The Dilemma of State Income Apportionment|
with Austan Goolsbee: w6614
This paper investigates the economic impact of the apportionment formulae used to divide corporate income taxes among the states. Most apportionment formulae, by including payroll, turn the state corporate income tax at least partially into a payroll tax. Using panel data from 1978 - 1994, the results show that this distortion has an important effect on state-level employment. For the average state, reducing the payroll weight from one-third to one-quarter increases manufacturing employment around 3% and the result is highly robust. The results also indicate that apportionment changes have important negative externalities on other states in that the effects of the apportionment formula on aggregate employment is zero. Every job gained within a state from an apportionment change is taken ...
Published: Journal of Public Economics, Vol. 75, no. 1 (January 2000): 125-143. citation courtesy of