학위논문(박사) -- 서울대학교대학원 : 경영대학 경영학과, 2021.8. 최가영.This dissertation is comprised of two essays on corporate disclosure activity and corporate behavior. The first essay, entitled Perceived Tax Audit Risk and Corporate Tax Behavior: Using Footnotes in 10-K Filings, examines the association between firms tax audit risk and its tax behavior. Utilizing a machine learning methodology, I measure the tax audit risk perceived by each firm as the extent of tax audit discussion in firms 10-K filings. I find that firms comply more with tax laws when they are subject to stronger tax enforcement. I validate the tax audit discussion in 10-K filings capturing tax audit risk rather than a rhetoric of managers by showing the correlation with the IRS audit probability. The results are robust when including both tax audit topic and the IRS audit probability, implying that firms tax audit discussion delivers incremental information to the IRS audit rate. Also, I find that there exists heterogeneity in the effect of tax audit risk across firms. The result is attenuated when there are stronger external monitoring mechanisms and when the firm operates in foreign jurisdictions.
The second essay, entitled The Effect of Financial Reporting Readability on Foreign Investors Information Acquisition Activity, examines the effect of financial reporting readability on foreign investors information acquisition activity. I contend that more readable financial reports facilitate foreign investors information collection activities, and this in turn increases foreign investors investment in U.S. stocks. As anticipated, I find that foreign investors more frequently access 10-K filings that are more readable. Their frequent access leads to higher foreign institutional ownership of U.S stocks in the subsequent period. I also find that the positive association between foreign access and financial reporting readability is stronger when readers are from countries of which language shares more similarities with English. Overall, findings suggest that financial reporting readability plays an important role in facilitating foreign investment, further highlighting the benefit of making financial reports more readable.Essay 1. Perceived Tax Audit Risk and Corporate Tax Behavior 1
1. Introduction 2
2. Related Literature and Hypothesis Development 8
2.1. The Effect of Tax Enforcement 8
2.2. Textual Information in Corporate Disclosure 10
2.2. Hypothesis Development 11
3. Data, Research Design, and Descriptive Statistics 13
3.1. Measuring the Tax Enforcement Risk 13
3.2. Sample 15
3.3. Regression Design 16
3.4. Descriptive Statistics 17
4. Empirical Results 18
4.1. The effect of tax audit risk on tax compliance 18
4.2. Validation Test 20
4.3. Cross-sectional tests 21
4.3.1. The role of institutional investors 21
4.3.2. The role of foreign operations 22
4.4. Robustness checks 23
5. Conclusions 23
References 25
Appendix 37
Essay 2. The Effect of Financial Reporting Readability on Foreign Investors Information Acquisition Activity 41
1. Introduction 42
2. Related Literature and Hypothesis Development 48
2.1. Financial Reporting Readability 48
2.2. Information Disadvantages of Foreign Investors over Domestic Investors 49
2.3. Hypothesis Development 51
3. Data, Research Design, and Descriptive Statistics 53
3.1. Data 53
3.2. Key Variable Definition 54
3.2.1. Foreign Access to 10-K filings (FOREIGN_ACCESS) 54
3.2.2. Foreign Investors Additional Information Search (COSEARCH) 55
3.2.3. Financial Reporting Readability (BOG) 56
3.3. Research Design 57
3.4. Descriptive Statistics 58
3.5. Correlation Matrix 59
4. Main Analysis Results 59
4.1. Test of H1 59
4.2. Does the frequent access lead to foreign investments? 61
4.3. Post-reading behavior 62
5. Additional Analysis and Robustness Tests 63
5.1. Language similarity 63
5.2. Does readability of 10-Ks affect portfolio selection for foreign investors? 65
5.3. Robustness tests 67
6. Conclusions 69
References 71
Appendix 92박