The Concave Association between Tax Reserves and Equity Value
研究发现企业价值与税收准备金呈凹形关系，即先增后减，存在最优水平；条件保守主义会减弱投资者对税收准备金变化的敏感度，且未来现金流预期是驱动该关联的主要因素。
ABSTRACT This study examines the form of the association between tax reserves and firm value. I find firm value is increasing in tax reserves at a diminishing rate until an optimal level is reached, after which firm value is decreasing in tax reserves. This concave association is consistent with investors having a firm-specific, optimal level of tax reserves where the expected benefits equal the expected costs. Conditional conservatism moderates this association such that investors of conservative firms are less sensitive to changes in tax reserves. I also decompose firm value into the numerator (expectations of future cash flows) and the denominator (cost of capital) and find the numerator impact is the primary driver of the concave association between tax reserves and firm value. The results highlight the importance of understanding how investor valuation of tax reserves may vary depending on the current level of tax reserves.