Do stock prices affect corporate tax behavior?

Purpose - This study aims to examine how firm-specific information in stock prices influences corporate tax behavior. Design/methodology/approach - This study uses ordinary least squares (OLS) regressions to examine the association between stock price informativeness and effective tax rate (ETR) volatility. Findings - Stock price informativeness is positively associated with short-term tax avoidance as measured by ETR volatility. Originality/value - While prior research examines the association between market activity and the level of ETRs, this study examines other various aspects of tax behavior.