Working Papers

IRS Officials’ Stock Holdings and Corporate Tax Outcomes

Revising for resubmission, Journal of Accounting Research

(with Mike Mayberry and Scott Rane)

Abstract: We investigate the information content of personal stock trades by IRS officials. We collect transaction-level data on over five thousand IRS officials’ personal investments and document substantial trading activity in individual stocks by officials across IRS departments. We find that IRS officials’ trades, predominantly their purchases, generate positive abnormal returns on average, consistent with officials’ information being not yet fully impounded into stock price. Next, we examine whether stock trades by these officials are associated with the firm’s future tax enforcement outcomes. For a given firm, we find IRS officials’ purchases are associated with subsequent decreases in tax reserves and specifically lapses in the statute of limitations. We also find that IRS officials’ sales are associated with subsequent unfavorable tax settlements. These findings suggest that IRS officials possess, and trade on, material tax-related information and that these trades are associated with future tax enforcement outcomes for firms.

Presentations: Journal of American Taxation Association Conference (2025); Bretton Woods Accounting and Finance Ski Conference (2025); Indiana University (2025, Rane)

Media Coverage: Boston Globe, Marginal Revolution, Cato Institute Research Brief, National Affairs

Adaptation in the Accounting Labor Supply

(with W. Robert Knechel and Paul Madsen)

Abstract: The accounting profession has long attracted people seeking secure careers, but we hypothesize that fear of technological disruption has, in recent years, made accounting less attractive to students sensitive about job security. Using exposure to contemporaneous mass layoffs in a student’s hometown as a shock to the salience of job security, we first show that layoff-exposed college freshmen were more likely to choose accounting during the 1990s but became less likely in the 2000s. This pattern is stronger when layoffs are attributable to automation. The long-run impact of technological change on the accounting profession likely depends, in part, on the extent to which it adapts. To test this, we next measure the extent to which accounting curricula have adapted to technological change using course catalogs from a large sample of U.S. universities from 2009-2020. We show that accounting curricula have been slower to incorporate instruction about new technologies than other business disciplines and that accounting major attrition is significantly attenuated in universities where accounting courses quickly adapt to cover new technologies. Together, our results suggest that accounting education, which was once especially attractive to security-focused students, has recently become less appealing to them because they fear technological disruption and that this phenomenon is likely exacerbated by the failure of the accounting education system to adapt.

Presentations: University of Florida, AAA Annual Meeting (2025)

Imported Tax Expertise

(with Kevin Munch and Marvin Nipper)