| 讲座简介： | Abstract: The paper investigates the effects of information asymmetry on corporate tax avoidance. Our baseline results indicate that analyst coverage reduces tax avoidance. Using a Difference-in-Differences approach based on two sources of exogenous changes in information asymmetry caused by broker closures and mergers, we find that firms engage in more tax avoidance activities after an exogenous drop in the number of analysts following the firm, compared to similar firms that do not experience such an exogenous drop in analyst coverage. The evidence therefore suggests a strong negative causal effect of analyst coverage on tax avoidance. We further find that the effects are mainly driven by the firms with smaller initial analyst coverage and more financial constraints. Moreover, the effects are more pronounced in the subset of firms with more information opacity and poorer corporate governance. We further discuss potential channels through which analysts affect tax avoidance: with less competition due to exogenous broker exits, the remaining analysts are producing less informative reports and issuing more biased forecasts. Overall, our paper offers novel evidence that information transparency plays an important role in corporate tax avoidance decisions, and with increased information opacity induced by exogenous drops in analyst coverage, firms are likely to avoid taxes more aggressively. JEL classification: D82; G24; G32; G34; H26; M40 Keywords: Information asymmetry; Analyst coverage; Corporate tax avoidance; Natural experiment; Broker closures and mergers |
