Identifier

etd-01192016-135349

Degree

Doctor of Philosophy (PhD)

Department

Accounting

Document Type

Dissertation

Abstract

Erickson, Heitzman, and Zhang’s (2013) results indicate that firms engage in tax-motivated loss recognition to offset previously recorded income. Since tax and financial income by design is linked (Guenther, Maydew, and Nutter 1997), net operating loss reporting can impose significant costs on CEOs who have to recognize similar losses for financial reporting purposes. As a result, firms must motivate the CEO to accelerate loss recognition if the firm expects to benefit from the cash inflows generated by the tax refund. In the current study, I examine whether CEO cash-based compensation increases to offset the potential negative costs that can arise due to NOL reporting. Counter to ex-ante predictions, the results do not indicate that CEO cash-based compensation increases surrounding NOL reporting. The lack of cash-based compensation increase is consistent with NOL reporting arising from poor financial performance, rather than tax-motivated loss recognition.

Date

2015

Document Availability at the Time of Submission

Release the entire work immediately for access worldwide.

Committee Chair

Crumbley, D. Larry

Included in

Accounting Commons

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