EEU511 The Real and Reporting Effects of Business Taxation

• Topics

  This course focuses on two major topics in empirical research on taxation: the real and the reporting effects of taxation. Tax policy changes are often intended to stimulate economic growth by motivating firms to hire more workers and increase investment spending. Researchers face two challenges when studying these real investment and employment effects. First, state and national governments engage in cross-border tax competition that alters where companies invest, complicating efforts to fully capture the real response. Second, governments use reporting regimes and disclosure incentives to facilitate firms’ real responses, but these regimes can induce reporting effects (Slemrod, 1992; Hanlon and Heitzman, 2010). Measuring the reporting response is critical because it can alter the effectiveness of business tax policies.

  This course will provide an overview of this literature and discuss how future research can address these two challenges. The first part of the course will focus on the empirical work related to the real effects of taxation. We will start with the theoretical foundations that motivate an investment response and then discuss several empirical papers that study investment and employment spending after tax policy changes. The second part of the course will focus on the reporting effects of taxation. For example, we will discuss how disclosure regimes, such as country-by-country reporting, impact business activity. We will also discuss the interaction between financial reporting and tax incentives, and a final session will focus on the particular choice about where to report income (i.e., income shifting). Because the literature that studies all of these outcomes spans public economics, finance, and accounting, our readings include selected papers from each field.

• Learning outcome

  Knowledge

  Upon successful completion of the course, the student is able to

  • Understand the foundational theory for the empirical work studying business tax responses to tax policies.
  • Identify different domestic and cross-border responses of firms to changes in tax policies.
  • Compare different empirical approaches for measuring real and reporting effects.

  Skills

  Upon successful completion of the course, the student is able to

  • Employ an analytical toolset on which to develop research ideas and execute empirical analyses.
  • Motivate research questions grounded in the extant literature.
  • Develop rigorous research designs to test empirical questions.

  General competence

  Upon successful completion of the course, the student can

  • Articulate knowledge of the relevant tax literature spanning economics, finance, and accounting.
  • Present the essentials of a research article, outlining the key contribution, empirical design, and findings
  • Identify topics for new research questions to advance the empirical tax field.

• Teaching

  The course consists of 8 lectures (90 minutes each). In addition, there are student presentations of 20-30 minutes each. During these presentations, students will present a relevant published paper; the presentation will consist of a summary of the work, as well as a discussion of two key questions or issues that the students identified. The course will be given in person (no Zoom option available).

• Restricted access

  • PhD candidates at NHH.
  • PhD candidates at Norwegian institutions.
  • PhD candidates at other institutions.
  • PhD candidates from the ENGAGE.EU alliance.

  We will accept a maximum of 40 students, with a first come first serve rule. Priority is given to NHH and ENGAGE.EU students.

  For more information about the application process, please visit our webpage: https://www.nhh.no/en/study-programmes/phd-programme-at-nhh/phd-courses/become-a-visiting-student-at-a- phd-course-at-nhh/ (copy link)

• Recommended prerequisites

  Graduate-level courses in microeconomics and econometrics.

• Compulsory Activity

  There are two compulsory activities that are not part of the final exam but are compulsory to pass the course:

  1. Readings and Summary: For each session, one focal paper should be read in its entirety (denoted with a * below); for this paper, students should also complete a one-page summary. This summary should answer four questions: What is the research question? Why is the paper important? How does the paper test the research question? What are the key findings? In addition to completing this, students should prepare one seminar-worthy question that they have related to the paper (contribution, hypothesis development, and empirical execution). For the other papers listed under each lecture, students are expected to have read the Introduction.

  2. Presentation: Starting in Session #2, student groups (2-3 students) should prepare a presentation about one of the non-focal papers. This presentation should last approximately 20-30 minutes, cover the four questions above, and provide at least one key issue or question that the students have about the paper. All students should present at least once in Sessions #2- #8, and no more than one group can present in any session.

• Assessment

  4-hour written home exam (100%). The exam consists of writing a 3-5 page research proposal outlining a research idea, the contribution, the hypothesis, and the proposed research design. The exam language is English, and all answers need to be given in English as well.

• Grading Scale

  Pass/Fail

• Literature

  Literature

  • Slemrod, J. 1992. Do taxes matter? Lessons from the 1980’s. American Economic Review, 250-256.
  • Lester, R. 2019. "Made in the U.S.A.? A Study of Firm Responses to Domestic Production Incentives." Journal of Accounting Research 57(4): 1063-1114

  The outline with complete list of readings will be available in due time prior to the course.