Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Faculty & Research
  • Faculty
  • Research
  • Featured Topics
  • Academic Units
  • …→
  • Harvard Business School→
  • Faculty & Research→
Publications
Publications
  • March 2009
  • Article
  • National Tax Journal

Earnings Management and Corporate Tax Shelters, and Book-Tax Alignment

By: Mihir Desai and Dhammika Dharmapala
  • Format:Print
  • | Pages:18
ShareBar

Abstract

This paper reviews recent evidence analyzing the link between earnings management and corporate tax avoidance and considers the implications for how policymakers should evaluate the financial reporting environment facing firms. A real-world tax shelter is dissected to illustrate how tax shelter products enable managers to manipulate reported earnings. A stylized example is developed that generalizes this view of corporate tax avoidance and empirical evidence consistent with this view is discussed. This view of corporate tax avoidance implies that shareholders and policymakers should question the rationale for distinct financial reports and that greater book-tax alignment may have mutually beneficial effects for investors and tax authorities.

Keywords

Earnings Management; Taxation; Financial Reporting; Business and Shareholder Relations

Citation

Desai, Mihir, and Dhammika Dharmapala. "Earnings Management and Corporate Tax Shelters, and Book-Tax Alignment." National Tax Journal 62, no. 1 (March 2009): 169–186.
  • SSRN
  • Find it at Harvard

About The Author

Mihir A. Desai

Finance
→More Publications

More from the Authors

    • Harvard Business Review

    A Better Way to Assess Managerial Performance

    By: Mihir Desai, Mark Egan and Scott Mayfield
    • February 2021
    • Faculty Research

    The Tulsa Massacre and the Call for Reparations

    By: Mihir Desai, Ruth Page, Suzanne Antoniou and Leanne Fan
    • December 2020 (Revised February 2021)
    • Faculty Research

    The Tulsa Massacre and the Call for Reparations

    By: Mihir A. Desai and Suzanne Antoniou
More from the Authors
  • A Better Way to Assess Managerial Performance By: Mihir Desai, Mark Egan and Scott Mayfield
  • The Tulsa Massacre and the Call for Reparations By: Mihir Desai, Ruth Page, Suzanne Antoniou and Leanne Fan
  • The Tulsa Massacre and the Call for Reparations By: Mihir A. Desai and Suzanne Antoniou
ǁ
Campus Map
Harvard Business School
Soldiers Field
Boston, MA 02163
→Map & Directions
→More Contact Information
  • Make a Gift
  • Site Map
  • Jobs
  • Harvard University
  • Trademarks
  • Policies
  • Accessibility
  • Digital Accessibility
Copyright © President & Fellows of Harvard College