The Role of Information Asymmetry in Closely-held Firms’ Tax and Financial Reporting Choice

Fan, H., Mawani, A., and Chen, L. “The Role of Information Asymmetry in Closely-held Firms’ Tax and Financial Reporting Choice” Accounting and Business Research, https://www.tandfonline.com/doi/full/10.1080/00014788.2021.1986366

Posted: 18 Nov 2021

See all articles by Amin Mawani

Amin Mawani

York University - Department of Accounting

Date Written: November 16, 2021

Abstract

This study examines whether and how closely-held ownership is associated with the relationship between tax and financial reporting aggressiveness. More specifically, we find that although both closely-held and widely-held firms pursue tax savings and higher reported earnings, closely-held firms are less aggressive compared to widely-held firms in pursuing both simultaneously. We argue and find evidence that this is associated with non-controlling shareholders and controlling shareholders concerned about agency costs imposed by each on the other. Furthermore, this finding is driven mainly by firms with high information asymmetry (as proxied by firm size, analyst following and board size), suggesting that information asymmetry is a channel through which closely-held ownership is associated with firms’ tax and financial reporting choices

Keywords: tax aggressiveness, financial reporting aggressiveness, closely-held firms

Suggested Citation

Mawani, Amin, The Role of Information Asymmetry in Closely-held Firms’ Tax and Financial Reporting Choice (November 16, 2021). Fan, H., Mawani, A., and Chen, L. “The Role of Information Asymmetry in Closely-held Firms’ Tax and Financial Reporting Choice” Accounting and Business Research, https://www.tandfonline.com/doi/full/10.1080/00014788.2021.1986366 , Available at SSRN: https://ssrn.com/abstract=3964836

Amin Mawani (Contact Author)

York University - Department of Accounting ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
51
PlumX Metrics