Please use this identifier to cite or link to this item: http://hdl.handle.net/10397/8287
Title: The effect of hedge fund activism on corporate tax avoidance
Authors: Cheng, CSA 
Huang, HH
Li, Y
Stanfield, J
Keywords: Corporate governance
Hedge fund activism
Tax avoidance
Issue Date: 2012
Publisher: American Accounting Association
Source: Accounting review, 2012, v. 87, no. 5, p. 1493-1526 How to cite?
Journal: Accounting review 
Abstract: This paper examines the impact of hedge fund activism on corporate tax avoidance. We find that relative to matched control firms, businesses targeted by hedge fund activists exhibit lower tax avoidance levels prior to hedge fund intervention, but experience increases in tax avoidance after the intervention. Moreover, findings suggest that the increase in tax avoidance is greater when activists have a successful track record of implementing tax changes and possess tax interest or knowledge as indicated by their Securities and Exchange Commission (SEC) 13D filings. We also find that these greater tax savings do not appear to result from an increased use of high-risk and potentially illegal tax strategies, such as sheltering. Taken together, the results suggest that shareholder monitoring of firms, in the form of hedge fund activism, improves tax efficiency.
URI: http://hdl.handle.net/10397/8287
ISSN: 0001-4826
DOI: 10.2308/accr-50195
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