FASB Interpretation Number 48 (FIN 48) and Corporate Innovation

dc.contributor.author Goldman, Nathan
dc.contributor.author Lampenius, Niklas
dc.contributor.author Radhakrishnan, Suresh
dc.contributor.author Stenzel, Arthur
dc.contributor.author de Almeida, Jose Elias Feres
dc.date.accessioned 2020-12-01T00:59:09Z
dc.date.available 2020-12-01T00:59:09Z
dc.date.issued 2020-08-15
dc.description.abstract In this paper, we analyze the real effect of financial statement tax disclosures on corporate innovation activities. In 2007, the FASB issued FIN 48, which mandates the separate disclosure of reserves for unrecognized tax benefits (UTBs). Using patent applications as a measure of corporate innovation, we employ a difference-in-difference research design with publicly listed U.S. firms as the treatment group and privately held U.S. firms not subject to the disclosure requirements as the control group. We hypothesize and find robust evidence that following the onset of FIN 48, the number of patent applications by publicly listed firms decreased. We also provide evidence that the decrease is attributable to incremental innovation, which is more subject to the UTB disclosure requirements. Overall, our evidence provides support for the real effects of disclosures on innovation activities.
dc.identifier.uri http://hdl.handle.net/10125/70529
dc.subject Uncertain Tax Positions
dc.subject Fin 48
dc.subject Radical Innovation
dc.subject Incremental Innovation
dc.subject Patents
dc.subject Backward Citations
dc.title FASB Interpretation Number 48 (FIN 48) and Corporate Innovation
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