The Changing Role of Auditors in Corporate Tax Planning

This paper examines changes in the role that auditors play in corporate tax planning following recent events, including the well-known accounting scandals, passage of the Sarbanes-Oxley Act, and regulatory actions by the SEC and PCAOB. On the whole, these events have increased the sensitivity to and scrutiny of auditor independence. We examine the effects of these events on the market for tax planning, in particular the longstanding link between audit and tax services. While the effects are recent, they are already being seen in the data. Specifically, there has already been a dramatic shift in the market for tax planning away from obtaining tax planning services from one's auditor. We estimate that the ratio of tax fees to audit fees paid to the auditors of firms in the S&P 500 decline from approximately one in 2001 to one-fourth in 2004. At the same time, we find no evidence of a general decline in spending for tax services. In sum, the evidence indicates a decoupling of the longstanding link between audit and tax services, such that firms are shifting their purchase of tax services away from their auditor and towards other providers.

Complex permittivity measurements of lunar samples at microwave and millimeter wavelengths

The relative dielectric constant and loss tangent of lunar sample 14163,164 (fine dust) were determined as a function of density at 9.375, 24, 35, and 60 GHz. In addition, such measurements have also been performed on lunar sample 14310,74 (solid rock) at 9.375 GHz. The loss tangent was found to be frequency independent at these test frequencies and had a value of 0.015 for the lunar dust sample

Did Dividends Increase Immediately After the 2003 Reduction in Tax Rates?

The Jobs and Growth Tax Relief Reconciliation Act of 2003 reduces the maximum statutory personal tax rate on dividends from 38.1 percent to 15 percent. This study analyzes dividend declarations in the quarter following passage. Aggregate dividends rose by 9 percent when boards of directors first met following enactment. Consistent with the dividend changes being tax-motivated, they are increasing in the percentage of the firm held by individuals. Dividend changes also increased with insider ownership, consistent with managers acting in their own interests. However, these results are limited primarily to firms that made large, special dividends. We find little evidence of an increase in regular, quarterly dividend payments.

Did Firms Substitute Dividends for Share Repurchases after the 2003 Reductions in Shareholder Tax Rates?

This paper tests whether firms altered their dividend and share repurchase policies in response to the 2003 reductions in shareholder tax rates. We predict that firms substituted dividends for repurchases, because the reduction in dividend tax rates exceeded the reduction in the capital gains tax rates. As expected, we find substitution and find that it is increasing in the percentage of the company owned by individual investors, the only shareholders affected by the legislation. These findings are consistent with boards of directors considering the tax preferences of individual stockholders (particularly officers and managers) when setting dividend and share repurchase policies.

Capital Gains Taxes and Stock Reactions to Quarterly Earnings Announcements

This paper examines the impact of capital gains taxes on equity pricing. Examining three-day cumulative abnormal returns for quarterly earning announcements from 1983-1997, we present evidence consistent with shareholders' capital gains taxes affecting stock price responses. To our knowledge, this is the first study to link shareholder taxes and share price responses to earnings releases. The results imply that shares trade at higher (lower) prices when individual investors face incremental taxes (tax savings) created by selling appreciated (depreciated) shares before they qualify for long-term treatment. Unlike prior studies that have focused on price reactions in settings where shareholder taxes are unusually salient (e.g., tax law changes, turn-of-the-year trading, or tax-sensitive transactions), this study finds the imprint of capital gains taxes in a more general setting.

Valuing Fed Cattle Using Objective Tenderness Measures

Beef tenderness is critical in consumer satisfaction with beef steak products. Current fed cattle valuation systems do not differentiate carcasses based upon tenderness variation. However, considerable research indicates consumers are willing to pay more for tender relative to tough beef steak. This article develops a tenderness-augmentation to current fed cattle grid pricing systems. Using a large set of actual carcasses, we determine that a tenderness-augmented price grid would reorder fed cattle value by on average nearly $5.00/cwt dressed relative to current valuation methods. Substantial opportunity is present to improve beef tenderness through new price signals to producers.beef quality, meat tenderness, cattle value, cattle price, Agribusiness, Farm Management, Food Consumption/Nutrition/Food Safety, Livestock Production/Industries, Q11, Q13, M31,

Capital Gains Holding Periods and Equity Trading: Evidence from the 1998 Tax Act

This paper exploits an unusually powerful setting to explore a choice many individual investors face regularly the decision to sell today or postpone selling until lower rates are available in the future. We examine trading volume and stock returns around the 1998 reduction in the holding period required for individual investors to receive the most favorable long-term capital gains tax rate. For firms whose initial public shareholders were affected by the legislation, we find trading volume increasing and share returns decreasing in past price performance on the day the legislation was publicly disclosed. The results are consistent with capital gains holding periods distorting markets sufficiently that if investors are permitted to liquidate appreciated positions at favorable rates, enough will sell immediately to move prices. To our knowledge, this is the first study linking trading volume and security prices to a change in capital gains holding periods.

The Impact of Capital Gains Taxes on Stock Price Reactions to S&P 500 Inclusion

This paper contributes to our understanding of the determinants of price responses to inclusion in the S&P 500 by providing evidence consistent with capital gains tax planning impacting stock reactions. Tests are conducted on 426 additions from 1978-1999. We regress the returns on the first trading day following announcement on a capital gains tax measure and controls. The evidence is consistent with the share prices of appreciated firms being temporarily bid up to compensate individual shareholders for any unanticipated capital gains taxes triggered when they sell to index funds and the share prices of depreciated firms being temporarily diminished when individual shareholders sell because buyers and sellers share the tax savings associated with deductible capital losses. We infer from these findings that in rebalancing their portfolios after S&P 500 additions, index funds share individual shareholders' capital gains taxes (or tax savings) through sales price adjustments. Consistent with temporary price pressure, further analysis shows that much of the price reaction unwinds over the following week's trading. Finding that personal capital gains taxes affect stock returns in a setting that does not bias toward taxes mattering suggests that capital gains tax capitalization may be a pervasive feature in equity valuation.

Dietary Acid Load and Bone Turnover During Long-Duration Spaceflight and Bed Rest

Background Bed rest studies document that a lower dietary acid load is associated with lower bone resorption. Objective We tested the effect of dietary acid load on bone metabolism during spaceflight. Design Controlled 4-d diets with a high or low animal proteinto-potassium (APro:K) ratio (High and Low diets, respectively) were given to 17 astronauts before and during spaceflight. Each astronaut had 1 High and 1 Low diet session before flight and 2 High and 2 Low sessions during flight, in addition to a 4-d session around flight day 30 (FD30), when crew members were to consume their typical in-flight intake. At the end of each session, blood and urine samples were collected. Calcium, total protein, energy, and sodium were maintained in each crew member's preflight and in-flight controlled diets. Results Relative to preflight values, N-telopeptide (NTX) and urinary calcium were higher during flight, and bone-specific alkaline phosphatase (BSAP) was higher toward the end of flight. The High and Low diets did not affect NTX, BSAP, or urinary calcium. Dietary sulfur and age were significantly associated with changes in NTX. Dietary sodium and flight day were significantly associated with urinary calcium during flight. The net endogenous acid production (NEAP) estimated from the typical dietary intake at FD30 was associated with loss of bone mineral content in the lumbar spine after the mission. The results were compared with data from a 70-d bed rest study, in which control (but not exercising) subjects APro:K was associated with higher NTX during bed rest. Conclusions Long-term lowering of NEAP by increasing vegetable and fruit intake may protect against changes in loss of bone mineral content during spaceflight when adequate calcium is consumed, particularly if resistive exercise is not being performed. This trial was registered at clinicaltrials.gov as NCT01713634

Conductivity of dielectric and thermal atom-wall interaction

We compare the experimental data of the first measurement of a temperature dependence of the Casimir-Polder force by Obrecht et al. [Phys. Rev. Lett. {\bf 98}, 063201 (2007)] with the theory taking into account small, but physically real, static conductivity of the dielectric substrate. The theory is found to be inconsistent with the data. The conclusion is drawn that the conductivity of dielectric materials should not be included in the model of the dielectric response in the Lifshitz theory. This conclusion obtained from the long separation measurement is consistent with related but different results obtained for semiconductors and metals at short separations.Comment: 4 pages, 2 figures; page size is correcte