5.4. Specific measures of ‘‘tax aggressiveness’’
The final tax attribute that we examine is tax aggressiveness. As discussed above, there is no generally accepted
definition of this construct, and it is thus difficult to measure. Nevertheless, we investigate two recently developed
measures of tax aggressiveness: Frank et al.’s (2009) DTAX and Wilson’s (2009) SHELTER. Frank et al. (2009 p. 468) define
‘‘aggressive tax reporting’’ as ‘‘a downward manipulation of taxable income through tax planning that may or may not be
considered fraudulent tax evasion.’’ Anecdotal evidence suggests that for public companies, the ideal tax planning
transactions are those that create permanent differences.24 By creating permanent differences, the firm reduces cash taxes
paid without decreasing financial statement income.