Student or educator? Sign up with your school email and get 6 months of Pro free.
CoChat
Sign Up
Cited by 191

The DOI matches its Crossref record.

The Effect of Political Sensitivity and Bargaining Power on Taxes: Evidence from Federal Contractors

Mills, Lillian F., Nutter, Sarah E., Schwab, Casey M.·2013·The Accounting Review
DOI 10.2308/accr-50368
Open this paper in CoChat — free account

Abstract

We investigate whether politically sensitive contractors pay higher taxes and whether their bargaining power reduces these tax costs. Using federal contractor data, we develop a new composite measure of political sensitivity that captures both the political visibility arising from federal contracts and the importance of federal contracts to the firm. We proxy for bargaining power using the firm-level proportion of contract revenues not subject to competition, the firm-level proportion of contract revenues arising from defense contracts, and industry-level concentration ratios. We find that politically sensitive firms pay higher federal taxes, all else equal. However, firms with greater bargaining power incur fewer tax-related political costs. Our study provides new evidence on the political cost hypothesis in a tax setting and the first evidence of the interactive effects of a firm's political sensitivity and bargaining power on tax-related political costs. JEL Classifications: M41; H26

Overview

The claims and statistics of this paper haven’t been checked yet.

Run the check — free, no account needed. It reads the open-access text and checks the sources it cites.

A few free checks a day · papers already verified open instantly · results are public

Integrity signals

Registry

Crossref · 10.2308/accr-50368

Cites

Statistics

Verification

Claims the paper makes

The claims and statistics of this paper haven’t been checked yet.

Run the check — free, no account needed. It reads the open-access text and checks the sources it cites.

A few free checks a day · papers already verified open instantly · results are public

Self-check

Percentages, sums and reported differences re-computed from the paper’s own numbers.

The self-check needs the paper’s full text.

Citations

Cites

No references could be resolved yet.

Research works printed but not linked: 83

  1. Ali, 2009, The limitations of industry concentration measures constructed with Compustat data: Implications for finance research, Review of Financial Studies, 22, 3839, 10.1093/rfs/hhn103 · DOI · Paper page
  2. Altshuler, 2001, Where will they go if we go territorial? Dividend exemption and the location decisions of U.S. multinational corporations, National Tax Journal, 54, 787, 10.17310/ntj.2001.4.07 · doi:10.17310/ntj.2001.4.07
  3. Ayers, B., S. Laplante, and C. Schwab. 2011. Does tax deferral enhance firm value? Working paper, The University of Georgia. · DOI
  4. Ball, 1982, Corporate financial reporting: A methodological review of empirical research, Journal of Accounting Research, 20, 161, 10.2307/2674681 · DOI · Paper page
  5. Barth, 1998, Relative valuation roles of equity book value and net income as a function of financial health, Journal of Accounting and Economics, 25, 1, 10.1016/S0165-4101(98)00017-2 · DOI · Paper page
  6. Berrios, 2006, Government contracts and contractor behavior, Journal of Business Ethics, 63, 119, 10.1007/s10551-005-3969-8 · doi:10.1007/s10551-005-3969-8
  7. Brown, 2011, Aggressive corporate tax reporting: A detailed examination of the corporate-owned life insurance shelter, The Accounting Review, 86, 23, 10.2308/accr.00000008 · DOI · Paper page
  8. Chen, 2010, Are family firms more tax aggressive than non-family firms?, Journal of Financial Economics, 95, 41, 10.1016/j.jfineco.2009.02.003 · DOI · Paper page
  9. Christie, 1990, Aggregation of test statistics: An evaluation of the evidence on contracting and size hypotheses, Journal of Accounting and Economics, 15, 10.1016/0165-4101(90)90039-7 · DOI · Paper page
  10. Cloyd, 2003, Firm valuation effects of the expatriation of U.S. corporations to tax-haven countries, The Journal of the American Taxation Association, 25, 87, 10.2308/jata.2003.25.s-1.87 · doi:10.2308/jata.2003.25.s-1.87
  11. Crowe, 1986, The role of military strength in the world we face, Presidential Studies Quarterly, 16, 428
  12. De Simone, L., J. Robinson, and B. Stomberg. 2011. Distilling the Reserve for Uncertain Tax Positions: The Revealing Case of Black Liquor. Working paper, The University of Texas. · DOI
  13. De Waegenaere, A., R. Sansing, and J. Wieldhouwer. 2010. Financial Accounting Measures of Tax Reporting Aggressiveness. Working paper, Tilburg University. · doi:10.2139/ssrn.1697536
  14. Desai, 2002, Expectations and expatriations: Tracing the causes and consequences of corporate inversions, National Tax Journal, 55, 409, 10.17310/ntj.2002.3.03 · doi:10.17310/ntj.2002.3.03
  15. Dyreng, 2009, Using financial accounting data to examine the effect of foreign operations located in tax havens and other countries on U.S. multinational firms' tax rates, Journal of Accounting Research, 47, 1283, 10.1111/j.1475-679X.2009.00346.x · DOI · Paper page
  16. Dyreng, 2008, Long-run corporate tax avoidance, The Accounting Review, 83, 61, 10.2308/accr.2008.83.1.61 · DOI · Paper page
  17. Erickson, 2004, How much will firms pay for earnings that do not exist? Evidence of taxes paid on allegedly fraudulent earnings, The Accounting Review, 79, 387, 10.2308/accr.2004.79.2.387 · DOI · Paper page
  18. Fields, 2001, Empirical research in accounting choice, Journal of Accounting and Economics, 31, 255, 10.1016/S0165-4101(01)00028-3 · DOI · Paper page
  19. Frank, 2009, Tax reporting aggressiveness and its relation to aggressive financial reporting, The Accounting Review, 84, 467, 10.2308/accr.2009.84.2.467 · DOI · Paper page
  20. Graham, 1996, Proxies for the corporate marginal tax rate, Journal of Financial Economics, 42, 187, 10.1016/0304-405X(96)00879-3 · DOI · Paper page
  21. Gramlich, 2004, Taxes, keiretsu affiliation, and income shifting, Journal of Accounting and Economics, 38, 203, 10.1016/j.jacceco.2003.10.001 · DOI
  22. Grubert, 2003, Intangible income, intercompany transactions, income shifting, and the choice of location, National Tax Journal, 56, 221, 10.17310/ntj.2003.1S.05 · doi:10.17310/ntj.2003.1s.05
  23. Grubert, 2000, Do taxes influence where U.S. corporations Invest?, National Tax Journal, 53, 825, 10.17310/ntj.2000.4.02 · doi:10.17310/ntj.2000.4.02
  24. Grubert, 1998, The effect of taxes on investment and income shifting to Puerto Rico, Review of Economics and Statistics, 80, 365, 10.1162/003465398557609 · doi:10.1162/003465398557609
  25. Gupta, 1997, Determinants of the variability in corporate effective tax rates: Evidence from longitudinal data, Journal of Accounting and Public Policy, 16, 1, 10.1016/S0278-4254(96)00055-5 · DOI
  26. Gupta, 2003, Does discomformity in state corporate income tax systems affect compliance cost burdens?, National Tax Journal, 56, 355, 10.17310/ntj.2003.2.04 · doi:10.17310/ntj.2003.2.04
  27. Gupta, S., L. Mills, and E. Towery. 2012. FIN 48 and multistate income tax avoidance. Working paper, The University of Texas at Austin. · doi:10.2139/ssrn.1931930
  28. Hall, 1997, Damage awards and earnings management in the oil industry, The Accounting Review, 72 (1), 47
  29. Han, 1998, Political costs and earnings management of oil companies during the 1990 Persian Gulf crisis, The Accounting Review, 73, 103
  30. Hanlon, 2003, What can we infer about a firm's taxable income from its financial statements?, National Tax Journal, 56, 831, 10.17310/ntj.2003.4.07 · doi:10.17310/ntj.2003.4.07
  31. Hanlon, 2010, A review of tax research, Journal of Accounting and Economics, 50, 127, 10.1016/j.jacceco.2010.09.002 · DOI · Paper page
  32. Hanlon, 2007, An empirical examination of big business tax noncompliance, Taxing Corporate Income in the 21st Century, 171, 10.1017/CBO9780511510823.014 · DOI · Paper page
  33. Harris, 1993, The impact of U.S. tax law revision on multinational corporations' capital location and income-shifting decisions, Journal of Accounting Research, 31, 111, 10.2307/2491167 · DOI
  34. Harris, 1993, Income shifting in U.S. multinational corporations, Studies in International Taxation, 277
  35. Hines, 1994, Fiscal paradise: Foreign tax havens and American business, Quarterly Journal of Economics, 109, 149, 10.2307/2118431 · DOI
  36. Holthausen, 1983, The economic consequences of accounting choice: Implications of costly contracting and monitoring, Journal of Accounting and Economics, 19, 29, 10.1016/0165-4101(94)00376-G · DOI · Paper page
  37. Hulse, 1986, The timing of the stock market reaction to rifle-shot transition rules, The Journal of the American Taxation Association, 18, 57
  38. Jacob, 1996, Taxes and transfer pricing: Income shifting and the volume of intrafirm transfers, Journal of Accounting Research, 34, 301, 10.2307/2491504 · doi:10.2307/2491504
  39. Jennings, 2012, The extent of implicit taxes at the corporate level and the effect of TRA86, Contemporary Accounting Research, 29, 1021, 10.1111/j.1911-3846.2012.01157.x · doi:10.1111/j.1911-3846.2012.01157.x
  40. Jones, 1991, Earnings management during import relief investigations, Journal of Accounting Research, 29, 193, 10.2307/2491047 · DOI · Paper page
  41. Karpoff, 1999, Defense procurement fraud, penalties and contractor influence, Journal of Political Economy, 107, 809, 10.1086/250080 · DOI · Paper page
  42. Kemsley, 1998, The effect of taxes on production location, Journal of Accounting Research, 36, 321, 10.2307/2491480 · doi:10.2307/2491480
  43. Kern, 1992, Taxes and firm size: The effect of tax legislation during the 1980s, The Journal of the American Taxation Association, 14, 80
  44. Key, 1997, Political cost incentives for earnings management in the cable television industry, Journal of Accounting and Economics, 23, 309, 10.1016/S0165-4101(97)00012-8 · doi:10.1016/s0165-4101(97)00012-8
  45. Klassen, 2012, Cross jurisdictional income shifting, Contemporary Accounting Research, 29, 928, 10.1111/j.1911-3846.2011.01136.x · doi:10.1111/j.1911-3846.2011.01136.x
  46. Klassen, 2012, Are U.S. Multinational Corporations Becoming More Aggressive Income Shifters?, Journal of Accounting Research, 50, 1245, 10.1111/j.1475-679X.2012.00463.x · DOI · Paper page
  47. Klassen, 1993, Geographic income shifting by multinational corporations in response to tax rate changes, Journal of Accounting Research, 31, 141, 10.2307/2491168 · doi:10.2307/2491168
  48. Kothari, 2005, Performance matched discretionary accrual measures, Journal of Accounting and Economics, 39, 163, 10.1016/j.jacceco.2004.11.002 · DOI · Paper page
  49. Lisowsky, 2010, Seeking shelter: Empirically modeling tax shelters using financial statement information, The Accounting Review, 85, 1693, 10.2308/accr.2010.85.5.1693 · DOI · Paper page
  50. McGill, 2004, Lost in translation: Detecting tax shelter activity in financial statements, National Tax Journal, 57, 739, 10.17310/ntj.2004.3.13 · doi:10.17310/ntj.2004.3.13
  51. Mills, 1998, Book-tax differences and Internal Revenue Service adjustments, Journal of Accounting Research, 36, 343, 10.2307/2491481 · DOI · Paper page
  52. Mills, 2001, The influence of tax and non-tax costs on book-tax reporting differences: Public and private firms, The Journal of the American Taxation Association, 23, 1, 10.2308/jata.2001.23.1.1 · DOI
  53. Mills, 2004, Do foreign multinationals' tax incentives influence their U.S. income reporting and debt policy?, National Tax Journal, 57, 89, 10.17310/ntj.2004.1.05 · doi:10.17310/ntj.2004.1.05
  54. Mills, 1998, Investments in tax planning, The Journal of the American Taxation Association, 20, 1, 10.2308/jata.2001.23.1.1 · DOI
  55. Morck, 1991, Why investors value multinationality, Journal of Business, 64, 165, 10.1086/296532 · doi:10.1086/296532
  56. Moyer, 1990, Capital adequacy ratio regulations and accounting choices in commercial banks, Journal of Accounting and Economics, 13, 123, 10.1016/0165-4101(90)90027-2 · DOI · Paper page
  57. Newberry, 1998, Foreign tax credit limitations and capital structure decisions, Journal of Accounting Research, 36, 157, 10.2307/2491326 · doi:10.2307/2491326
  58. Newberry, 2001, Cross-jurisdictional income shifting by U.S. multinationals: Evidence from international bond offerings, Journal of Accounting Research, 39, 643, 10.1111/1475-679X.00032 · DOI
  59. Northcut, 1998, Earnings management in response to political scrutiny of effective tax rates, The Journal of the American Taxation Association, 20, 22
  60. Nutter, S. 1999. Statistics of Income Studies of International Income and Taxes. Statistics of Income Bulletin. Washington, DC: IRS.
  61. O'Hara, 1990, Deposit insurance and wealth effects: The value of being too big to fail, The Journal of Finance, 45, 1587
  62. Peltzman, 1976, Toward a more general theory of regulation, The Journal of Law and Economics, 19, 211, 10.1086/466865 · DOI · Paper page
  63. Petersen, 2009, Estimating standard errors in finance panel data sets: Comparing approaches, Review of Financial Studies, 22, 435, 10.1093/rfs/hhn053 · DOI · Paper page
  64. Petroni, 1992, Optimistic reporting in the property casualty insurance industry, Journal of Accounting and Economics, 14, 485, 10.1016/0165-4101(92)90003-K · DOI
  65. Porcano, 1986, Corporate tax rates: Progressive, proportional or regressive, The Journal of the American Taxation Association, 7, 17
  66. Porter, M. 1980. Competitive Strategy. New York, NY: The Free Press.
  67. Ramanna, 2010, Elections and discretionary accruals: Evidence from 2004, Journal of Accounting Research, 48, 445, 10.1111/j.1475-679X.2010.00373.x · DOI · Paper page
  68. Rice, 1992, The corporate tax gap: Evidence on tax compliance by small corporations, Why People Pay Taxes
  69. Richter, 2009, Lobbying and taxes, American Journal of Political Science, 53, 893, 10.1111/j.1540-5907.2009.00407.x · DOI · Paper page
  70. Rogers, W. 1993. Regression standard errors in clustered samples. In Stata Technical Bulletin Reprints, Vol. 13. College Station, TX: Stata Press.
  71. Seida, 2002, Market reaction to corporate inversion transactions, Taxnotes (November, 26), 1098
  72. Shackelford, 2001, Empirical tax research in accounting, Journal of Accounting and Economics, 31, 321, 10.1016/S0165-4101(01)00022-2 · DOI · Paper page
  73. Slemrod, 2001, A general model of the behavioral response to taxation, International Tax and Public Finance, 8, 119, 10.1023/A:1011204301325 · DOI
  74. Stigler, 1971, The theory of economic regulation, Bell Journal of Economics and Management Science, 2, 3
  75. Stockman, 2008, Top Iraq contractor skirts US taxes offshore, The Boston Globe
  76. Vines, 1996, U.S. tax policy and the location of R&D, The Journal of the American Taxation Association, 18, 74
  77. Watts, R., and J. Zimmerman. 1986. Positive Accounting Theory. Edgewood Cliffs, NJ: Prentice Hall.
  78. Watts, 1990, Positive accounting theory: A ten year review, The Accounting Review, 65, 131
  79. White, 1980, A heteroscedasticity-consistent covariance matrix estimator and a direct test for heteroscedasticity, Econometrica, 48, 817, 10.2307/1912934 · DOI · Paper page
  80. Wilkie, 1990, The relationship between firm size and effective tax rate: A reconciliation of Zimmerman [1983] and Porcano [1986], The Journal of the American Taxation Association, 11, 76
  81. Wilson, 2009, An examination of corporate tax shelter participants, The Accounting Review, 84, 969, 10.2308/accr.2009.84.3.969 · DOI · Paper page
  82. Wong, 1988, Political costs and an intraperiod accounting choice for export tax credits, Journal of Accounting and Economics, 10, 37, 10.1016/0165-4101(88)90022-5 · DOI
  83. Zimmerman, 1983, Taxes and firm size, Journal of Accounting and Economics, 5, 119, 10.1016/0165-4101(83)90008-3 · DOI · Paper page

Cited by

See all 191

Metadata

Authors
Mills, L. F., Nutter, S. E., & Schwab, C. M.
Venue
The Accounting Review
Publisher
American Accounting Association
Published
2012-12-01
Volume
88
Issue
3
Pages
977-1005
ISSN
  • 0001-4826 (ISSN-L)
  • 1558-7967
DOI
10.2308/accr-50368
OpenAlex
W3122177489
Cited by
191
References
0
FWCI
21.05
Type
journal article
Language
en
Open access
closed

About these checks

Registry, retraction, Cites and statistics results are computed, not judged, with one exception: a printed reference that no index lists is read once by a model before it counts as a citation error. Claims are extracted by a model and kept only when their quote appears verbatim in the text; each cited source is then checked, with a model’s help, for whether it says what the claim relies on. Those verdicts can be wrong — read the claim’s quote and the cited source before relying on one.

Statistics and arithmetic are recomputed, not judged.

Confidence bands are shown only for fields calibrated on our annotated test set. None is calibrated yet, so no band is shown.

What counts as a claim ›How we measure confidence ›How we check this ›

Are you an author, or do you see a problem with this page? Request a review

How to cite

Cite CoChat for the checks on this page, and the paper for its own findings.

This page
CoChat. (2026). Citation check: The Effect of Political Sensitivity and Bargaining Power on Taxes: Evidence from Federal Contractors. https://app.cochat.ai/papers/10.2308/accr-50368
The paper
Mills, L. F., Nutter, S. E., & Schwab, C. M. (2013). The Effect of Political Sensitivity and Bargaining Power on Taxes: Evidence from Federal Contractors. The Accounting Review. https://doi.org/10.2308/accr-50368

Data sources

Bibliographic data: Semantic Scholar, OpenAlex, Crossref.

Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).

Semantic Scholar’s data is described in: Kinney, R., et al. (2023). The Semantic Scholar Open Data Platform. arXiv:2301.10140.