The effect of high-quality information technology on corporate tax avoidance and tax risk

Russ Hamilton, James Stekelberg

Research output: Contribution to journalArticle

2 Citations (Scopus)

Abstract

We examine the effect of high-quality information technology (IT) on corporate tax outcomes. Using a measure of IT quality constructed from rankings in InformationWeek magazine, we find that firms with high-quality IT are able to achieve both lower and less volatile cash effective tax rates than are other firms. These results suggest that firms with high-quality IT are able to avoid more taxes while simultaneously incurring less tax risk compared to firms with lesser IT systems. We also perform mediation analyses to investigate the channels through which highquality IT enables effective tax planning. Results of these tests suggest that the most important driver of our findings is timely, reliable information facilitated by high-quality IT. Our study contributes to both the IT and tax literatures by identifying and quantifying the returns to investments in IT in terms of more favorable corporate tax outcomes.

Original languageEnglish (US)
Pages (from-to)83-106
Number of pages24
JournalJournal of Information Systems
Volume31
Issue number2
DOIs
StatePublished - 2017
Externally publishedYes

Fingerprint

Taxation
Information technology
Tax avoidance
Corporate tax
Quality information
Tax
Planning

Keywords

  • Business value of IT
  • Information technology
  • Tax avoidance
  • Tax risk

ASJC Scopus subject areas

  • Management Information Systems
  • Software
  • Information Systems
  • Accounting
  • Human-Computer Interaction
  • Information Systems and Management
  • Management of Technology and Innovation

Cite this

The effect of high-quality information technology on corporate tax avoidance and tax risk. / Hamilton, Russ; Stekelberg, James.

In: Journal of Information Systems, Vol. 31, No. 2, 2017, p. 83-106.

Research output: Contribution to journalArticle

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