Darden School of Business Professors Luann Lynch and Mary Margaret Frank and their research colleague, Sonja Rego, have won the 2011 American Taxation Association Outstanding Tax Manuscript Award for the research paper, “Tax Reporting Aggressiveness and Its Relation to Aggressive Financial Reporting,” which was published in The Accounting Review in March 2009.
The paper - which was written because Frank says, “In spite of the noted rise of financial fraud and tax shelters, no one had examined whether or not companies were relying on both” - shows that companies with aggressive financial reporting tactics also have the most aggressive tax reporting.
Their follow-up study, “Are Aggressive Reporting Practices Reflective of a Broader Corporate Culture?” examines whether firms with aggressive financial and tax reporting tactics are more aggressive across the board, in their investing, financing, operating and compensation strategies. The authors will present the study at a conference held by the National Bureau of Economic Research later in 2011.
The article was a natural collaboration for the two Darden colleagues. Frank wants to understand how both economic and behavioral factors influence a company’s response to reporting regulation while Lynch’s work examines how accounting and compensation influence management behavior, including aggressive reporting.
The American Tax Association fosters the dissemination and publication of information on taxation, promotes the interface of tax-oriented education, curriculum, research and policy across academic disciplines (e.g., law, economics and accounting), and encourages the interaction of academics and tax practitioners.
Frank and Lynch both teach in the Accounting area at Darden. Frank’s current research focuses on the effects of regulated disclosure on the strategy of corporate management, investors and entrepreneurs. Her interest in regulated disclosure focuses on financial accounting, tax and patent reporting. Additional academic interests include the integration of business principles and public policy objectives and public-private partnerships. Lynch’s current research focuses primarily on the design of incentive and compensation systems and related issues around corporate governance.
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