D Murali

The e-reader revolution

D. MURALI | Updated on November 15, 2017


The revolution on the streets that catches the attention of Lucas de Lima Carvalho is not that of armed crowds and battle cries, but something that walks to the beat of silence. Among clicks, finger touching and hand gestures in mid-air, Ernest Hemingway and Clarice Lispector talk to their public, the author finds. And that The New York Times and Le Monde are searched for updates, for all sorts of information. “Thousands of the most acclaimed best sellers in the whole world occupy deserted shelves, empty rooms. People just walk in and experience an unprecedented transformation in the habit of reading: literary works become e-books. And thousands of them fit in the palm of our hands thanks to a technological wonder called e-reader,” reads a snatch of Carvalho's paper titled, ‘ The Tax Immunity of E-Readers in Brazil' ( www.ssrn.com).

Exploring the gamut of tax immunity in the country, the author concludes by saying that when members of the judiciary have an e-reader in their hands, filled with classic and modern works of legal science, they will understand the impossibility of taxing the more sustainable and efficient alternative to the current medium of reading, relegating the immunity to materials that are irrelevant to the Brazilian consumers. “This will be the point of inflection, for the benefit of taxpayers and of the society in general.”

Topical read, on your tablet!

Political leaning

With the election scene in focus, it can be apt to study ‘ Managers' Personal Political Orientation and Corporate Tax Avoidance,' a recent research paper by Dane Christensen and Dan Dhaliwal of the Department of Accounting in the University of Arizona.

The paper investigates whether managers' personal political orientation helps explain tax avoidance at the firms they manage. And the intriguing result is that, on average, firms with top executives who lean toward the Republican Party actually engage in less tax avoidance than firms whose executives lean toward the Democratic Party. These findings, the authors note, are consistent with the argument that Republican managers' preference for lower taxes is dominated by their desire to be conservative. “Thus, the conservative tone at the top they set leads the firm to engage in less tax avoidance than firms that are run by Democrat managers.”

Additionally, the authors find that this effect appears to be driven by the subset of managers who are entrenched, which is consistent with managers having more freedom to imprint their personal preferences on firms with weaker governance. The authors inform that the ‘entrenchment' variable is calculated by counting the following provisions that are in place at the firm during the fiscal year: chartered board, poison pill, golden parachute, requirement to approve merger, limited ability to amend charter and limits to amend bylaws.

Apart from shedding light on why we see so much variation in firms' willingness to avoid taxes, the paper also suggests that knowing the political orientation of managers can help predict changes in the tax component of a firm's earnings.

Important messages that may hold good in other geographies too.

Published on January 01, 2012

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