- The Experience
- The Programs
- Faculty & Research
- Insights
- Accounting
- Big Data
- Career & Success
- Corporate Governance
- Economics
- Education
- Energy & Environment
- Entrepreneurship
- Finance
- Government
- Health Care
- Innovation
- Leadership
- Management
- Marketing
- Nonprofit
- Operations, Information & Technology
- Organizational Behavior
- Political Economy
- Social Impact
- Supply Chain
- Alumni
- Events
Taxation and Corporate Risk-Taking
Taxation and Corporate Risk-Taking
The Accounting Review. May
2018, Vol. 93, Issue 3, Pages 237-266
We study whether the corporate tax system provides incentives for risky firm investment. We analytically and empirically show two main findings: first, risk-taking is positively related to the length of tax loss periods because the loss rules shift some risk to the government; and second, the tax rate has a positive effect on risk-taking for firms that expect to use losses, and a weak negative effect for those that cannot. Thus, the sign of the tax effect on risky investment hinges on firm-specific expectations of future loss recovery.