Taxpayer search for information: implications for rational attention

We examine data on capital-gains-tax-related information search to determine when and how taxpayers acquire information. We find seasonal increases in information search around tax deadlines, suggesting that taxpayers seek information to comply with tax law. Positive correlations between stock market activity and search as well as year-end spikes in information search on capital losses when the market performs poorly suggest that taxpayers seek information for tax planning purposes. Policy changes and news events cause information search. These data suggest that taxpayers are not always fully informed, but that rational attention and exogenous shocks to tax salience drive taxpayer information search

Financial Accounting Consequences of Temporary Tax Law: Evidence from the R&D Tax Credit.

This paper investigates the extent to which extensions of a temporary tax law reduce market participants’ ability to predict and understand corporate earnings. Examining evidence from eight separate extensions of the R&D tax credit, I find that market participants adjust their expectations for corporate earnings upwards in response to extensions of the R&D tax credit, but doing so incrementally decreases the accuracy of earnings forecasts. The evidence also suggests that abnormal bid-ask spreads around quarterly earnings announcements increase for firms affected by an expired R&D tax credit, suggesting that trading costs rise when markets have difficulty interpreting earnings affected by the expired R&D tax credit. The results of this study call attention to previously unexplored costs of temporary tax laws—capital market confusion related to corporate earnings affected by expired tax laws.PhDBusiness AdministrationUniversity of Michigan, Horace H. Rackham School of Graduate Studieshttp://deepblue.lib.umich.edu/bitstream/2027.42/102375/1/jhoopes_1.pd

U.S. Firms on Foreign (tax) Holidays

We undertake the first large-sample analysis of foreign tax holiday participation by U.S. firms. Tax holidays are temporary reductions of tax granted by governments, usually contingent on the firm making new operational investments in the country. We predict and find that firms are more likely to participate in foreign tax holidays if they are highly capital-intensive and have highly profitable foreign operations, and less likely to participate in foreign tax holidays if they are capital constrained and if the firm is headed by a short-term focused CEO. While foreign tax holidays reduce taxes on foreign income, we also find that during our sample period they increase the amount of U.S. tax on foreign income. Finally, we predict and find that firms participating in foreign tax holidays increase the amount of foreign earnings that they deem to be permanently reinvested for financial reporting purposes

Does credit-card information reporting improve small-business tax compliance?

We investigate the response of small businesses operating as sole proprietorships to Form 1099-K, an information report introduced in 2011 which provides the Internal Revenue Service with information about electronic sales (e.g., credit card sales). The overall impact of the policy appears to be relatively small. However, theory and distributional analysis isolates a subset of taxpayers expected to be especially sensitive to reporting, who report receipts equal to or slightly exceeding the receipts reported on 1099-K. Among this set of taxpayers, information reporting induced more complete tax reporting–30% of sensitive taxpayers filed a return declaring business income for the first time, and among those that were already filing, we estimate an increase in reported receipts by up to 24%. These taxpayers largely offset increased reported receipts with increased reported expenses, which do not face information reporting, diminishing the impact on reported net taxable income

The Effect of Tax Authority Monitoring and Enforcement on Financial Reporting Quality

This paper examines the relation between tax enforcement and financial reporting quality. The government, due to its tax claim on firm profits, is de facto the largest minority shareholder in almost all corporations. Therefore, the government, like other shareholders, has an interest in the accurate reporting of (taxable) income and preventing insiders from siphoning corporate funds to obtain private benefits. We hypothesize and find evidence that higher tax enforcement by the tax authority has a positive association with financial reporting quality. Further, we find that this association is generally stronger when other monitoring mechanisms are weaker. Our evidence is consistent with the predictions from the Desai, Dyck, and Zingales (2007) theory that the tax authority provides a monitoring mechanism of corporate insiders. Our paper also adds to the literature on the determinants of financial reporting quality and how the relation between accounting standards and reporting outcomes depends on country-level institutions.University of Michigan. Harry Jones Endowment for Earnings Quality Researc

Derived variants at six genes explain nearly half of size reduction in dog breeds

Selective breeding of dogs by humans has generated extraordinary diversity in body size. A number of multibreed analyses have been undertaken to identify the genetic basis of this diversity. We analyzed four loci discovered in a previous genome-wide association study that used 60,968 SNPs to identify size-associated genomic intervals, which were too large to assign causative roles to genes. First, we performed fine-mapping to define critical intervals that included the candidate genes GHR, HMGA2, SMAD2, and STC2, identifying five highly associated markers at the four loci. We hypothesize that three of the variants are likely to be causative. We then genotyped each marker, together with previously reported size-associated variants in the IGF1 and IGF1R genes, on a panel of 500 domestic dogs from 93 breeds, and identified the ancestral allele by genotyping the same markers on 30 wild canids. We observed that the derived alleles at all markers correlated with reduced body size, and smaller dogs are more likely to carry derived alleles at multiple markers. However, breeds are not generally fixed at all markers; multiple combinations of genotypes are found within most breeds. Finally, we show that 46%–52.5% of the variance in body size of dog breeds can be explained by seven markers in proximity to exceptional candidate genes. Among breeds with standard weights <41 kg (90 lb), the genotypes accounted for 64.3% of variance in weight. This work advances our understanding of mammalian growth by describing genetic contributions to canine size determination in non-giant dog breeds

A course-based research experience: how benefits change with increased investment in instructional time

There is widespread agreement that science, technology, engineering, and mathematics programs should provide undergraduates with research experience. Practical issues and limited resources, however, make this a challenge. We have developed a bioinformatics project that provides a course-based research experience for students at a diverse group of schools and offers the opportunity to tailor this experience to local curriculum and institution-specific student needs. We assessed both attitude and knowledge gains, looking for insights into how students respond given this wide range of curricular and institutional variables. While different approaches all appear to result in learning gains, we find that a significant investment of course time is required to enable students to show gains commensurate to a summer research experience. An alumni survey revealed that time spent on a research project is also a significant factor in the value former students assign to the experience one or more years later. We conclude: 1) implementation of a bioinformatics project within the biology curriculum provides a mechanism for successfully engaging large numbers of students in undergraduate research; 2) benefits to students are achievable at a wide variety of academic institutions; and 3) successful implementation of course-based research experiences requires significant investment of instructional time for students to gain full benefit

Analysis of large versus small dogs reveals three genes on the canine X chromosome associated with body weight, muscling and back fat thickness

International audienceDomestic dog breeds display significant diversity in both body mass and skeletal size, resulting from intensive selective pressure during the formation and maintenance of modern breeds. While previous studies focused on the identification of alleles that contribute to small skeletal size, little is known about the underlying genetics controlling large size. We first performed a genome-wide association study (GWAS) using the Illumina Canine HD 170,000 single nucleotide polymorphism (SNP) array which compared 165 large-breed dogs from 19 breeds (defined as having a Standard Breed Weight (SBW) >41 kg [90 lb]) to 690 dogs from 69 small breeds (SBW ≤41 kg). We identified two loci on the canine X chromosome that were strongly associated with large body size at 82–84 megabases (Mb) and 101–104 Mb. Analyses of whole genome sequencing (WGS) data from 163 dogs revealed two indels in the Insulin Receptor Substrate 4 (IRS4) gene at 82.2 Mb and two additional mutations, one SNP and one deletion of a single codon, in Immunoglobulin Superfamily member 1 gene (IGSF1) at 102.3 Mb. IRS4 and IGSF1 are members of the GH/IGF1 and thyroid pathways whose roles include determination of body size. We also found one highly associated SNP in the 5’UTR of Acyl-CoA Synthetase Long-chain family member 4 (ACSL4) at 82.9 Mb, a gene which controls the traits of muscling and back fat thickness. We show by analysis of sequencing data from 26 wolves and 959 dogs representing 102 domestic dog breeds that skeletal size and body mass in large dog breeds are strongly associated with variants within IRS4, ACSL4 and IGSF1

Effects of Anacetrapib in Patients with Atherosclerotic Vascular Disease

BACKGROUND: Patients with atherosclerotic vascular disease remain at high risk for cardiovascular events despite effective statin-based treatment of low-density lipoprotein (LDL) cholesterol levels. The inhibition of cholesteryl ester transfer protein (CETP) by anacetrapib reduces LDL cholesterol levels and increases high-density lipoprotein (HDL) cholesterol levels. However, trials of other CETP inhibitors have shown neutral or adverse effects on cardiovascular outcomes. METHODS: We conducted a randomized, double-blind, placebo-controlled trial involving 30,449 adults with atherosclerotic vascular disease who were receiving intensive atorvastatin therapy and who had a mean LDL cholesterol level of 61 mg per deciliter (1.58 mmol per liter), a mean non-HDL cholesterol level of 92 mg per deciliter (2.38 mmol per liter), and a mean HDL cholesterol level of 40 mg per deciliter (1.03 mmol per liter). The patients were assigned to receive either 100 mg of anacetrapib once daily (15,225 patients) or matching placebo (15,224 patients). The primary outcome was the first major coronary event, a composite of coronary death, myocardial infarction, or coronary revascularization. RESULTS: During the median follow-up period of 4.1 years, the primary outcome occurred in significantly fewer patients in the anacetrapib group than in the placebo group (1640 of 15,225 patients [10.8%] vs. 1803 of 15,224 patients [11.8%]; rate ratio, 0.91; 95% confidence interval, 0.85 to 0.97; P=0.004). The relative difference in risk was similar across multiple prespecified subgroups. At the trial midpoint, the mean level of HDL cholesterol was higher by 43 mg per deciliter (1.12 mmol per liter) in the anacetrapib group than in the placebo group (a relative difference of 104%), and the mean level of non-HDL cholesterol was lower by 17 mg per deciliter (0.44 mmol per liter), a relative difference of -18%. There were no significant between-group differences in the risk of death, cancer, or other serious adverse events. CONCLUSIONS: Among patients with atherosclerotic vascular disease who were receiving intensive statin therapy, the use of anacetrapib resulted in a lower incidence of major coronary events than the use of placebo. (Funded by Merck and others; Current Controlled Trials number, ISRCTN48678192 ; ClinicalTrials.gov number, NCT01252953 ; and EudraCT number, 2010-023467-18 .)