$\begin{array}{l} T a x S h e l t e r_{i t} (B T D s; R B T D s; D P D s) \\ = β_{0} + β_{1} D i v e r g e n c y + β_{2} P T R O A_{i t} + β_{3} N O L_D_{i t} + β_{4} F O R_D_{i t} + β_{5} D A P_{i t} + β_{6} L E V_{i t} \\ + β_{7} M T B_{i t} + β_{8} E M 1_{i t} + β_{9} E M 2_{i t} + β_{10} Δ P T C F O_{i t} + β_{11} S I Z E_{i t} + ε_{i t} \end{array}$
Variables	Expected sign	Taxshelter = BTDs	Taxshelter = RBTDs	Taxshelter = DPDs
Variables	Expected sign	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 Desai and Dharmapala (2006) ;
DPDs	The discretionary permanent difference is the measure of tax sheltering developed by Frank et al. (2009) ;
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 Kothari et al. (2005) ;
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.