







































Aisthesis      Volume 10,  20191

Trading on Tax Avoidance

by Jaden T. Wright

I. Introduction
 Corporate tax avoidance has caused a lot of 
controversy among investors and analysts. While 
avoidance activities can range from relatively benign 
actions like accelerating depreciations and deferrals 
to more aggressive strategies such as income shifting 
and tax-haven operations (Hanlon & Slemrod, 
2009; Wilson, 2009), tax avoidance of any form can 
be considered a transfer of wealth away from the 
government to a firm’s shareholders. However, tax 
avoidance may also be costly for firms, as it increases 
confusion about companies’ expected cash flows due 
to increased uncertainty about future tax savings 
(Blouin, 2014); decreases the transparency of the 
firm, making valuation and forecasting more difficult 
(Weber, 2009); and potentially raises concerns from 
regulatory bodies such as the Internal Revenue 
Service (IRS). Thus, whether tax avoidance is net 
positive for investors remains an open question.
 The purpose of this study is to determine 
whether equity investors can generate abnormal 
returns from trading on the tax avoidance 
aggressiveness of publicly-traded firms. Given 
the inherent difficulty analysts and investors have 
in impounding tax information into stock prices 
(Weber, 2009; Powers, Schmidt, Seidman, & 
Stomberg, 2017), it is straightforward to assume 
that complex tax avoidance strategies can create 
profitable opportunities for investors. In particular, 
I hypothesize that aggressive tax-avoiding firms will 
generate positive abnormal returns as investors fail 
to immediately appreciate the cash flow savings this 
tax-avoiding strategy will produce. Additionally, 
based on the findings of studies such as Guenther, 
Matsunaga, and Williams (2017), I expect firms with 
greater amounts of uncertainty surrounding their 
tax rates (i.e. tax risk) to earn higher stock returns 
as a means of compensating equity investors for 
increasing the riskiness of the firm. 
 Previous work has predominantly focused on 
how tax avoidance affects the valuation of companies 
without necessarily attempting to identify whether 

tax-avoiding firms are mispriced. For example, Desai 
and Dharmapala (2009) find that tax avoidance 
does not increase a firm’s value unless it is coupled 
with a strong corporate governance framework.1 
Kim, Li, and Zhang (2011) demonstrate that tax 
avoidance aggressiveness is associated with higher 
stock price crash risk, suggesting that tax aggressive 
firms may have lower valuations relative to less tax 
aggressive firms due to increased riskiness. However, 
the findings of Goh, Lee, Lim, and Shevlin (2016) 
show that tax avoidance causes firms to have a lower 
equity cost of capital, implying that they are actually 
less risky, and Guenther et al. (2017) suggest that tax 
avoidance does not contribute to firm risk, but rather 
it is the stability of tax avoidance aggressiveness that 
matters. In more recent work, Jacob and Schütt 
(2016) and Drake, Lusch, and Stekelberg (2017) 
show that tax avoidance increases a firm’s value. 
This suggests that that investors positively value 
tax avoidance activities, but also demonstrate that 
increased tax risk, as measured by the volatility 
of a firm’s tax rates, lowers investors’ valuations, 
implying that uncertainty surrounding taxes harms 
shareholder value.
 While the aforementioned papers show that tax 
avoidance aggressiveness and tax risk can affect the 
worth of a corporation, they do not demonstrate 
whether the stock market fully impounds this 
value-relevant information into a firm’s share prices. 
Indeed, as my results show, it is possible to design 
simple trading strategies based on measures of a 
firm’s tax avoidance aggressiveness and tax risk that 
generate economically meaningful profits.
 Specifically, I show that tax aggressive firms 
produce higher returns than less aggressive firms. 
These results suggest that increased tax savings may 
have a positive effect on firm valuation. In some 
cases, the difference in returns amounted to over 800 
1 Firms with strong corporate governance exhibit balanced 
board control, unconcealed manager decision-making, 
and extensive information sharing to shareholders and 
analysts.



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basis points (bps) a year. I find this to be a significant 
variable for making equity investment decisions. 
This refutes the findings of Guenther et al. (2017) 
that show tax avoidance levels are not associated 
with differences in returns. While these results are 
substantial, I follow previous consensus that tax 
avoidance aggressiveness should not be the sole 
measurement for firm valuation and, thus, I capture 
a risk component of tax avoidance.  
 With regard to avoidance volatility (i.e. tax risk), 
I find firms with higher tax risk to earn greater 
returns than low tax risk firms. I find tax risk to 
be a significant variable in the valuation of firms. 
Specifically, because aggressive tax avoidance seems 
to cause uncertainty in future cash flow, high tax 
avoidance yields higher levels of tax risk. It is the 
volatile firms that carry the highest returns with 
volatile effective tax rates earning over 700 bps more 
a year than less volatile effective tax rates. While 
Drake et al. (2017) show the mitigative effects of 
tax risk on valuation, I find a positive result of tax 
risk on firm return. Equity investors appear to be 
compensated for carrying more risk.   
 One inference that could be made is that these 
results follow a basic trend in which equity investors 
are compensated for holding more firm risk. I adjust 
for this relationship by controlling for systematic 
risk along with other performance variables. Even 
after controlling for the risk premium, I find firms 
with low tax risk and high rates earn very low 
returns, while firms that have low tax rates and high 
risk generate higher returns. I regress each portfolio 
against an asset pricing model to capture mispricing 
within tax aggressive firms. My results suggest that 
the market discounts firms with inconsistently low 
tax rates too much, leading to an undervaluation. 
These results support the idea that investors do not 
completely realize the tax cash savings of high tax-
avoiding firms. 
 My research contributes to the literature by 
presenting a material trading strategy based on a 
firm’s tax avoidance aggressiveness. I empirically 
show a mispricing between tax avoidance portfolios 
based on firms’ returns. I further contribute to the 
encompassing research on tax avoidance and its 
relationship with firm valuation. The rest of the 
paper is structured in the following way: section two 
formulates my hypothesis; section three describes 

my research method and data; section four presents 
my results; and section five offers conclusions from 
the study.

II. Hypothesis Formation
 The ability of investors to fully incorporate 
complex tax environments has been a subject of 
interest in recent literature. This study provides 
evidence of significant earning differentials between 
aggressive avoiding and non-aggressive avoiding 
firms. Investors often ignore firm-specific tax 
information and rely heavily on the statutory tax rate 
when making valuation decisions (Powers, Seidman, 
& Stomberg, 2015). Interim or even permanent tax 
fluctuations may be ignored when pricing a firm’s 
stock. Kim, Schmidt, and Wentland (2015) find that 
analysts underreact to tax change components more 
than other earnings components of a firm. They 
attribute this underreaction to analysts’ failure to 
fully recognize the difference between permanent 
and temporary effective tax rate changes. Clearly, 
there is evidence that a firm’s tax environment may 
be overlooked in valuation. Both management and 
analyst accuracy in predicting effective tax rates have 
been shown to decrease as a firm’s tax complexity 
increases (Bratten, Gleason, Larocque, & Mills, 
2017). As the aggressive tax-avoiding firms operate 
in complexity and uncertainty with regards to future 
tax cash flow effectiveness, it can be assumed that 
aggressive-avoiding firms create more complex 
tax information environments. Given the inherent 
difficulty analysts and investors have in impounding 
tax information into the stock prices of complex 
tax-situated firms, I hypothesize that aggressive tax 
avoidance strategies can create profitable mispricing 
opportunities for investors. 

H1: Aggressive tax-avoiding firms generate 
positive abnormal returns.

  This tax complexity refers, in part, to the 
uncertainty of future tax strategies or tactics having 
their desired effect. Avoidance activities can be 
challenged and overruled by U.S courts and, for an 
aggressive tax-avoiding firm, the effective rates can 
fluctuate period to period. This causes uncertainty 
in the tax savings and cash flows which is the tax 



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Aisthesis      Volume 10,  20193

risk component of a firm. Guenther et al. (2017) 
found a positive relationship between tax risk and 
overall firm risk. Because investors are compensated 
for holding more risk, I assert that aggressive tax-
avoiding firms follow this investment relationship.  

H2: Investors are compensated for holding firms 
with higher tax risk. 

III. Data and Methodology
 I follow Dyreng, Hanlon, and Maydew (2008) 
and Goh et al.’s (2016) definitions of tax avoidance 
to include all activities that lower a firm’s tax 
liability and effective tax rate. I use predefined tax 
avoidance measures to capture the range of tax 
avoidance aggressiveness. Tax-avoiding activities 
can be permanent or temporary in nature, and it 
may be unclear which category it falls into when 
a firm implements it, which supports the idea that 
tax avoidance is often misunderstood.2 Simone, 
Nickerson, Seidman, and Stomberg (2016) examine 
the ability of different tax avoidance measures 
to capture these strategies. They find permanent 
strategies to be the most easily detectable. When a 
firm participates in tax avoidance, the effect it has 
on a firm can usually be observed and measured. 
Differences arise between the amount of income and 
tax expense on a company’s financial statements and 
its tax return. These differences can be described as 
book-to-tax differences (BTD). Firms involved in 
tax sheltering often have larger BTDs. The effective 
tax rate (ETR) refers to a firm’s tax rate on taxable 
income. 
 I use Compustat to analyze company financial 
data for firm-years with positive pre-tax income 
over the period 1992–2015. Negative values of pre-
tax income would distort the measurement variables 
and, though firms may have an operating loss during 
a period, this is not likely to persist in the long-
run.  Following prior studies, I exclude financial (SIC 
codes 6000-6999) and utility (SIC codes 4900-4999) 
firms. These types of firms are heavily regulated and 
have a variety of different tax regulations imposed 

2 Activities that recognize a tax benefit in a current period, 
with the benefit having to be repaid in a later one, are 
temporary activities. Under a permanent strategy, a firm 
uses a tax deduction activity that permanently lowers its 
effective tax rate. 

upon them. I further censor ETR, CETR, and the 
5-year CETR at 0 and 1. This removes outliers in the 
data that could skew the results. Also, the number 
of observations removed by this censoring is trivial. 
BTD and Permanent BTD variables are winsorized 
at 1 and 99 percent. Table 1 displays the sample of 
observations for the data. For certain variables, five 
consecutive years of observable tax measurements are 
required, which reduces the number of observations. 
 This research is formulated from previously 
established tax avoidance measurements. I use a 
variety of measurements to distinguish between 
low tax avoiders and high tax avoiders. Specifically, 
these measures identify firms that likely participate 
in tax avoidance and, based on the work of Simone 
et al.   (2016), the type of tax strategy. I start by 
examining the ETRs of a firm. These rates indicate 
the level of tax expense a firm faces in relation to 
their pre-tax income. I follow the equation used by 
Simone et al. (2016) to study this variable.
      

  

where: 

txt is total income tax expense and pi is pre-tax 
income. Recognizing that the effective tax rate is 
representative of the amount of tax a firm’s income 
is subject to, we should see high tax-aggressive firms 
having a low effective tax rate, all things equal. This 
measurement is also known as the GAAP effective 
tax rate. This measurement shows permanent tax 
strategies but falls short in detecting temporary tax 
savings. Tests using ETR are vulnerable to errors 
caused by low levels of pre-tax income, differences 
in financial reporting related to tax reserves, and/



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Aisthesis      Volume 10,  20194

or reinvested foreign earnings.3 For this, the cash 
effective tax rate is more commonly used to capture 
the true aggressiveness of a firm’s tax avoidance. 
Again, I apply Simone et al.’s (2016) CETR as a 
variable for tax avoidance.

where: 

txpd is income taxes paid and pi is pre-tax income. 
This shows the actual amount of tax cash flow 
that a firm recognizes. These measurements can 
be positive or negative and can be greater than 
one, which would reflect tax payments exceeding 
pre-tax income, leading to the censoring of these 
variables. Analyzing monthly CETR measurements 
may capture alternative variables that affect CETR 
but may not be associated with tax avoidance. 
Because of this, I take multiple period averages to 
formulate results and smooth out the tax avoidance 
measure. Dyreng et al. (2008) develop a long-run tax 
avoidance measure for Cash ETR. Combining this 
with the research of Simone et al. (2016), I measure 
long-run tax avoidance as follows: 

Here, the five-year total income taxes paid is divided 
by the five-year total pre-tax income form the same 
period. This measurement is the preferred variable 
in prior tax avoidance studies.4 Grouping firm-years 
together should lower the volatility of CETR over 
these five-year periods.
 Another common way to measure tax avoidance 
is by looking at the BTDs of a firm. These are the 
differences between the income reported to capital 
3 As Simone et al. (2016) explain: “U.S. multinationals 
that earn income abroad can choose to either defer U.S. 
taxation on qualified foreign earnings until they are 
repatriated back to the U.S. (which reflects a temporary 
strategy that does not affect ETR) or assert their intention 
to permanently reinvest these foreign earnings and 
avoid accruing the incremental U.S. tax (which reflects a 
permanent strategy that lowers ETR).” 
4 Studies such as Drake et al. (2017); Goh et al. (2016); 
Guenther et al. (2017); and Kim et al. (2011) use the 
long-run tax avoidance measure laid out by Dyreng et al. 
(2008).

markets and the IRS. Like ETR, this measure can 
capture many different aspects of tax avoidance. My 
use of this measurement is closest to that of Goh et 
al. (2016). 

where:

pi refers to pre-tax income, txfo refers to foreign tax 
expense, txfed refers to federal tax expense, 0.35 is 
used as the statutory tax rate, and at refers to total 
assets. This tax measurement is used in the research 
of Desai et al. (2009) and Guenther et al. (2017). 
BTDs can be positive or negative and are often 
winsorized at 1 and 99 percent. They detect various 
tax avoidance strategies but may be impaired by low 
levels of assets in a firm (Simone et al., 2016). Frank, 
Lynch, and Rego (2009) develop an alternative 
calculation of BTDs intended to separate permanent 
and temporary differences. I utilize this as a further 
proxy for measuring tax avoidance within BTDs.

      

Simply, this is the difference between total BTDs 
and temporary BTDs, where txdi is total deferred 
tax expense. Goh et al. (2016) use this measurement 
in detecting tax avoidance, and Simone et al. (2016) 
find that tests using total BTDs have the best ability to 
detect the effects of a hybrid tax avoidance strategy.5 
Permanent tax avoidance is best detected while 
studying a firm’s ETR, and temporary strategies are 
most easily detected by analyzing Cash ETR.
 Studies of tax avoidance ultimately deal with the 
question of tax risk and measure it as the volatility 
of a firm’s tax rates. Following Drake et al. (2017), 
Guenther et al. (2017), and Jacob et al. (2015), I 
measure tax risk as the standard deviation of each of 
the aforementioned tax measurements. The volatility 
of these measurements represents the level of 
uncertainty in a tax strategy resulting in the desired 
tax savings. This tax uncertainty is well documented 
5 Simone et al. (2016) denote hybrid strategies as having 
both temporary and permanent components to it, such 
as income shifting that requires temporary deferral and 
generates permanent tax credits. 



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in the literature. Drake et. al (2017) assert that tax 
avoidance and tax risk should be mutually considered 
in valuation. Each tax risk variable is measured on a 
five-year rolling average to better capture long-run 
tax risk. Table 2 describes the correlation between the 
variables. My results indicate a positive relationship 
between tax risk and firm return, which is observed 
in the portfolio regressions. 
 My avoidance portfolios represent different 
levels of tax avoidance aggressiveness from one to 
ten. For ETRs, firms in portfolio one, p1, carry the 
lowest tax rates and are observed to be the most 
aggressive tax avoiders. Firms in portfolio ten, p10, 
carry the highest tax rates and are observed to be 
the least aggressive tax avoiders. This is reversed for 
BTD portfolios, as lower differences are associated 
with less aggressive tax avoidance. I sort firm years 
into these portfolios by measuring their tax rates 
and book-to-tax differences. Each measurement 
produces a robust distribution within each portfolio. 
The average measure of each portfolio is presented 
in Tables 3 and 4. As I will show, the highest returns 
are present in the most aggressive tax-avoiding 
portfolios. This type of relationship is consistent 
with the tax cash savings principle described by Goh 
et al. (2016). 
 Because my research seeks to analyze the 
influence of tax risk, I separate firms into portfolios 
by the level of tax volatility. This is measured as the 

standard deviation of each measurement over five-
year periods. Firms in portfolio one, rp1, have the 
lowest level of avoidance volatility (lowest tax risk). 
Firms in portfolio ten, rp10, have the highest level 
of avoidance volatility (highest tax risk). Table 5 
describes the measures of the tax risk portfolio 
allocation. I find the highest tax risk portfolios to 
produce the highest returns. As I will show in my 
regression analysis, this is still present after adjusting 
for systematic risk. 
 While portfolio sorts are helpful in determining 
whether expected returns vary based on a firm’s tax 
rates or levels of tax risk, they fail to account for 
differences in expected returns due to the exposure 
to systematic risk. For example, if the return 
differential between portfolios sorted on tax risk 
is simply due to increased exposure to systematic 
risk, then investors cannot enjoy abnormal returns 
by investing in high tax risk portfolios and shorting 
low tax risk portfolios. To address these concerns, 
I regress the monthly returns of the portfolios, 
discussed in the section above, against the five-factor 
asset pricing model, developed in Fama and French’s 
(2015) study, to control for variables that are widely 
accepted indications of stock performance. 
 For the risk component, I regress the returns of 
the tax avoidance portfolios in excess of the risk-free 
rate (assumed to be the return on the one-month 
Treasury bill) against the Fama-French five factors:

where:

MKT is the market risk premium, defined to be 
the return of the Center for Research in Security 
Prices (CRSP) value-weighted stock index minus 
the return of the one-month Treasury bill. SMB is a 



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Aisthesis      Volume 10,  20196

well-diversified portfolio that is long on stocks with 
low market capitalizations and short sells assets with 
high market capitalizations. HML is a well-diversified 
portfolio that is long on value stocks (i.e. stocks with 
high book-to-market ratios) and short sells growth 
stocks (i.e. firms with low book-to-market ratios). 
RMW is a well-diversified portfolio that is long on 
stocks with robust operating profitability and short 
sells stocks with weak operating profitability. CMA 
is a well-diversified portfolio that is long on stocks 
that invest conservatively and short sells stocks that 
invest aggressively.
 Data on the five factors and the risk-free rate are 
available on Ken French’s website.6 As my regression 
model features excess returns on the left-hand side 
and returns-based factors on the right-hand side, 
the vertical intercept of the regression (i.e. αp) can 
be interpreted as Jensen’s alpha (e.g., Jensen, 1968), 
a measure of the portfolio’s performance above 
or below what the benchmark asset pricing model 
estimates the portfolio return ought to be, given its 
exposure to systematic risk as proxied by the Fama-
French factors. Accordingly, Jensen’s alpha can be 
used as a measure of the abnormal returns an investor 
can expect to earn in excess of the risk the portfolio 
carries. As the results show, this pricing model 
reveals abnormal returns for equity investment in 
aggressive tax-avoiding portfolios.

IV. Empirical Results
 My research produces significant results for the 
portfolio analysis and residual regression analysis. 
I confirm tax avoidance aggressiveness to have 
positive results for equity investors. An analysis 
of the portfolio performance identifies useful 
information for equity trading. Table 6 identifies the 
monthly returns of each portfolio described above, 
while Table 7 indicates the statistical significance of 
the highest and lowest portfolios measured against 
the five-factor model. 
 Under ETR portfolio allocation, I find that 
firms with lower effective tax rates produce higher 
returns. p1 yields 804 bps more per year than p10. 
This supports Drake et al.’s (2017) finding that 

6 This site forms portfolios of firms based on a wide range 
of economic and firm-specific variables: http://mba.tuck.
dartmouth.edu/pages/faculty/ken.french/data_library.
html 

aggressive tax-avoiding firms earn higher returns 
through tax savings. I also find that firms with more 
volatile ETRs earn higher returns than those with 
less volatile ETRs. rp10 outperforms rp1 by 540 bps 
a year. Intuitively, these firms may be compensating 
investors for higher levels of risk. The most volatile 
firms are situated in the low ETR portfolios, which 
describes the correlation between tax aggressive 
firms. The opposite holds true with the least volatile 
firms having the highest ETRs. Returns seem to 
increase more as a firm moves from rp1 to rp10 
than they do as they move from p10 to p1. Based 
on this, I find the volatility of a firm’s ETR to be a 
larger determinant of returns than the firm’s ETR. 
However, the largest returns of the portfolios are 
earned by firms with low ETR.
 Portfolio allocation on CETRs reaffirm the ETR 
tests. p1 earns a monthly return of 1.99 percent 
compared to a monthly return of 1.72 percent for 
p10. This leads to low CETR firms earning 324 
bps more a year than high CETR firms. Highly 
volatile CETR firms also earn larger returns as rp10 
outperforms rp1 by 204 bps a year. Smoothing this 
measurement out over a five-year average (CETR5) 
produces the same relationship. p1 outperforms p10, 
and rp10 outperforms rp1 by 552 bps and 324 bps a 
year, respectively. 
 Book-to-tax differences yield less of a significant 
result. In fact, portfolios allocated by BTD seem to 
behave the opposite of portfolios allocated by tax 
rates. p1, which consists of low avoiders, outperforms 



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Aisthesis      Volume 10,  2019

p10, which are aggressive avoiders, by 384 bps a 
year. Firms with low BTDs earn, on average, higher 
returns than firms with high BTDs. Under this 
measurement, aggressive tax-avoiding firms are 
earning less returns than non-aggressive ones. BTD 
tax risk portfolios follow the same relationship as the 
others, where highly volatile BTDs yield the highest 
returns. Again, the returns seem to fluctuate more 
from the volatility than by the level of BTD. This 
supports the idea that tax risk is more influential 
than avoidance levels. Permanent BTDs are less 
descriptive, as no heterogeneity exists in returns for 
the PBTD portfolios. Higher returns do exist for 
volatile PBTDs, with rp10 yielding 804 bps more 
than rp1.
 While examining the raw returns of portfolios 
sorted on tax avoidance aggressiveness is useful, it 
is insufficient due to the fact that it does not control 
for differences in systematic risk exposure across the 
portfolios. Regressing these portfolios against an 
asset pricing model allows me to adjust for factors 
that have been observed to be strong indicators of 
stock performance, including a systematic risk factor 
to capture mispricing. Table 8 describes the residual 
alphas within portfolios sorted on ETR and σETR 
along with the corresponding level of significance. 
The same allocation of portfolios exists with p1 
representing low levels and p5 representing high 
levels.  Firms with low tax risk but high rates earn 
very low alphas, but firms that have low tax rates 
and high risk generate very high alphas. The largest 
residual alpha is seen in p1 for ETR (low ETR) and p5 
for σETR (high tax risk). Because alpha is a measure 
of excess, or abnormal, return over what an investor 
should receive, there is significant mispricing 
present in aggressive tax-avoiding firms. This seems 
to suggest that the market discounts firms with 
inconsistently low tax rates too much, leading to an 
undervaluation.

 Running this regression provides information 
about the types of firms that are earning these 
higher returns and are being mispriced. Highly 
profitable firms appear to make up a larger portion 
of the high ETR portfolio, yielding less return than 
lower profit firms. High profit firms may face more 
difficulty with avoiding taxes which places them in 
the lower return portfolio. These firms also seem to 
be present in the low tax risk portfolios. These results 
become inconsistent for book-to-tax differences, 
as profitable firms seem to have high BTDs. High 
CETR portfolios hold conservative investing firms. 
Growth stocks make up the higher return portfolios, 
which counteracts the tendency for value to 
outperform growth. Small-cap firms seem to carry 
more tax risk than large-cap firms and follow the 
tendency to outperform them. Further research of 
these relationships with tax aggressiveness is needed 
in order to better understand the types of firms that 
exhibit tax aggressiveness.
 Because portfolios with higher tax risk 
outperform portfolios with lower tax risk, I find that 
investors are compensated for holding the tax risk 
of tax aggressive firms after adjusting for the risk 
premium. These results support my hypothesis and 
the tax risk effect on return framework offered by 
Guenther et al. (2017). Furthermore, adjusting for 
the various components of expected returns, I find 
residual levels of return that are most abundantly 
present within highly aggressive tax-avoiding 
firms. This undervaluation affirms my hypothesis 
that aggressive tax-avoiding firms generate positive 
abnormal returns. Based on the findings of Powers 
et al. (2015), Kim et al. (2015), and Bratten et al. 
(2017), this mispricing may be due to the inability of 
investors to fully implement the cash flows from tax 
savings of highly aggressive tax-avoiding firms.
      
V. Conclusion 
      In conclusion, this study empirically shows that 
equity investors can generate abnormal returns 
from trading on the tax avoidance aggressiveness of 
publicly-traded firms. My research contributes to the 
literature of corporate tax avoidance by indicating 
that not only are investors compensated for holding 
tax risk, but they can take advantage of mispricing 
within aggressive tax-avoiding firms. I offer 
further opportunity for research into firm-specific 

7



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Aisthesis      Volume 10,  2019

characteristics of tax avoidance aggressiveness to 
develop a better understanding of tax avoidance. This 
paper and the findings of Goh et al. (2016), Jacob 
et al. (2016), and Drake et al. (2017) suggest that 
corporate tax avoidance is a net positive attribute in 
capital markets.     

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differences for future earnings? Contemporary 
Accounting Research, 26, 1175-206.

Wilson, R. J. (2009). An examination of corporate 
tax shelter participants. The Accounting Review, 
84 (3), 969-99. 

8



Trading on Tax Avoidance

Appendix

Aisthesis      Volume 10,  20199


