Tax accounting principles and corporate risk-taking
Abstract
We analyze the role of business taxation for corporate risk-taking under different accounting principles (such as mark-to-market, lower-of-cost-or-market and historical cost). We demonstrate that conservative accounting may imply incentives to overinvest in risky assets. However, with imperfect loss offsets, the mark-to-market principle penalizes risky investment whereas more conservative accounting leaves the risk choice unaffected.
Cite as
Becker, J., & Steinhoff, M. (2014). Tax accounting principles and corporate risk-taking. Economics Letters, 125(1), 79–81.Details
Publication type
Research article (journal)
Peer reviewed
Yes
Publication status
Published
Year
2014
Journal
Economics Letters
Volume
125
Issue
1
Start page
79
End page
81
Language
English
ISSN
01651765
DOI