Date of Completion


Embargo Period


Major Advisor

John Phillips

Associate Advisor

George Plesko

Associate Advisor

Joseph Golec

Field of Study

Business Administration


Doctor of Philosophy

Open Access

Campus Access


On May 10, 2013 the Internal Revenue Service announced that firms with assets between $10

million and $50 million were exempt from mandatory disclosure of Parts II and III of Schedule M-3

which requires corporations to include a detailed reconciliation of book income to taxable income in their

U.S. corporate income tax returns. Prior research suggests that (1) the detailed disclosures in Schedule M-

3 imposed significant costs on firms and (2) changes in mandatory IRS disclosure policy have a greater

impact on small firms. I use event study methodology and find that investors perceived the exemption as

increasing shareholder wealth. I also find that investors exempt from Schedule M-3 perceived FIN 48

favorably, possibly due to the latter serving as a valuable monitor of managers that simultaneously does

not provide the taxing authority with the necessary detail to identify aggressive tax positions.

I then investigate the strategies firms may employ to maintain total assets below the new

exemption threshold of $50 million in assets. I do not find evidence with firms changing their behavior to

maintain total assets below the prior exemption threshold of $10 million in assets. Overall, results from

this part of my analysis do not suggest that the benefits of exemption from Schedule M-3 will be

significant enough for firms near the new $50 million in assets threshold to actively seek to maintain