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| ||||
| Variables | Expected sign | Taxshelter = BTDs | Taxshelter = RBTDs | Taxshelter = DPDs |
| Coeff | Coeff | Coeff | ||
| Intercept |
| 0.045** | 0.121** | 0.311** |
| Divergency | − | −0.379* | −0.245** | −0.111* |
| PTROA | + | 0.314** | 0.217** | 0.109** |
| NOL_D | + | 0.065* | 0.045 | 0.103** |
| FOR_D | + | 0.035* | 0.143** | 0.319** |
| DAP | + | 0.121* | 0.319* | 0.288** |
| LEV | + | 0.056* | 0.203** | 0.068** |
| MTB | + | −0.003 | −0.121 | −0.093 |
| EM1 | + | −0.046* | 0.042** | 0.096** |
| EM2 | − | −0.041 | −0.033 | −0.101* |
| ΔPTCFO | + | −0.034 | 0.038 | 0.056 |
| SIZE | − | −0.004** | −0.017** | 0.067* |
| N |
| 6929 | 6929 | 6929 |
| Adj R2 |
| 0.217 | 0.209 | 0.256 |
| BTDs | The book income less taxable income scaled by lagged total assets; | |||
| RBTDs | The portion of book-tax gap not explained by earnings accruals which was developed by | |||
| DPDs | The discretionary permanent difference is the measure of tax sheltering developed by | |||
| Divergence | The ratio of cash flow rights (ownership) over control rights (voting rights) of the largest controlling shareholders; | |||
| PTROA | Pre-tax income at t year divided by total assets at year t − 1; | |||
| NOL_D | 1 if the net operating loss carryforwards for firm i at year t − 1 are greater than 0; 0 otherwise; | |||
| FOR_D | 1 if foreign income for firm i at year t is not equal to 0; 0 otherwise; | |||
| DAP | The performance-adjusted discretionary accruals suggested by | |||
| LEV | Total debt for firm i at year t, divided by total assets at year t; | |||
| MTB | Market value of common equity for firm i at year t − 1, divided by book value of common equity for firm i at year t − 11; | |||
| EM1 | 1 if net income in year t, divided by the market value of common equity at year t − 1, is greater than 0 and less than or equal to 0.01 for firm i, and 0 otherwise; | |||
| EM2 | 1 if the change in net income from year t − 1 to year t, divided by the market value of common equity at year t − 2 is greater than 0 and less than or equal to 0.01 for firm i, and 0 otherwise; | |||
| ΔPTCFO | Change in pre-tax cash flow from operations for firm i in year t, divided by total assets for firm i at year t − 1; and | |||
| SIZE | The natural logarithm of total assets at book value for firm i at year t. | |||