Do Enterprise Risk Assessments Affect Tax Aggressiveness? Evidence from U.S. ORSA Regulation
利用美国保险业ORSA监管的独特场景，研究发现强制实施企业风险评估促使管理者更新对税收激进非税风险的认知，显著降低了税收激进程度。
ABSTRACT Tax aggressiveness presents nontax risks to firms’ cash flow. Evaluating these risks requires information beyond the accounting function’s expertise, resulting in high processing costs to acquire and integrate risk information relevant to tax strategies. Managers can rationally adapt by making assumptions about risk information, potentially resulting in decision biases when evaluating the risk-reward tradeoff of tax aggressiveness. Using a novel regulatory setting in the U.S. insurance industry, I examine whether the adoption of mandated enterprise risk assessments updates managers’ prior beliefs about the nontax risks of tax aggressiveness. I find that as regulation requires managers to accept processing costs to acquire and integrate risk information, managers learn about previously underestimated nontax risks and significantly reduce tax aggressiveness. Results suggest that absent firm-wide internal risk information, managers can use aggressive tax positions without fully considering nontax risks. Data Availability: Data used in this study are available from public sources identified in the paper. JEL Classifications: G22; G32; H25; M41.