Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
959935 | Journal of Financial Economics | 2014 | 22 Pages |
Abstract
We find that firms with greater tax avoidance incur higher spreads when obtaining bank loans. This finding is robust in a battery of sensitivity analyses and in two quasi-experimental settings including the implementation of Financial Accounting Standards Board Interpretation No. 48 and the revelation of past tax sheltering activity. Firms with greater tax avoidance also incur more stringent nonprice loan terms, incur higher at-issue bond spreads, and prefer bank loans over public bonds when obtaining debt financing. Overall, these findings indicate that banks perceive tax avoidance as engendering significant risks.
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Social Sciences and Humanities
Business, Management and Accounting
Accounting
Authors
Iftekhar Hasan, Chun Keung (Stan) Hoi, Qiang Wu, Hao Zhang,