About

Michael Donohoe is the Irwin Jecha Distinguished Professor in Accountancy and the Head of the Department of Accountancy at the University of Illinois at Urbana-Champaign. He holds a Ph.D. in Accounting from the University of Florida and has previously served as an Associate Professor and Assistant Professor at the same institution. His research focuses on the intersection of financial reporting and corporate taxation, utilizing archival methods to explore how these areas influence each other. Donohoe's work includes examining the economic effects of tax strategies, corporate tax avoidance, and the role of financial derivatives in tax planning. He has contributed to the academic community through his role as an editor for The Accounting Review and has been recognized with several honors, including the Irwin Jecha Distinguished Professor in Accountancy and a fellowship from PricewaterhouseCoopers LLP. Donohoe is actively involved in teaching courses related to federal taxation of business entities and assurance and attestation, emphasizing practical problem-solving and professional skill development. His research and teaching aim to deepen understanding of corporate tax strategies and financial reporting, making significant contributions to the field of accounting and taxation.

Research topics

• Business
• Finance
• Monetary economics
• Economics
• Computer Science
• Accounting
• Microeconomics
• Public economics
• Marketing

Selected publications

• Corporate Payouts and the Banking Channel

  SSRN Electronic Journal · 2026-01-01

  preprintOpen access1st authorCorresponding
  PublisherDOI

• Shareholder perceptions of external tax advisors in corporate tax planning

  Contemporary Accounting Research · 2024-03-10 · 10 citations

  articleOpen access1st authorCorresponding

  Abstract We examine shareholders' perceptions about how external tax advisors contribute to corporate tax planning. As residual claimants of corporate tax planning, shareholders benefit from lower corporate taxes, but also bear the financial and reputational costs of subsequent tax enforcement. Despite the influential advisory role of external tax advisors in corporate tax planning, existing research on how shareholders perceive this role is limited. Using event study methods and exploiting the heightened regulation of tax advice through the covered opinion rules as a setting, we observe average and cross‐sectional stock returns consistent with shareholders perceiving external tax advisors as contributing unfavorably to tax planning by promoting excessively risky strategies. We further find that risky and overall tax planning declined across firms after the enactment of the rules, consistent with shareholders' perceptions about tax advisors' contributions to firms' tax planning. Overall, our findings contribute to research on shareholder perceptions and valuation of tax planning, and have important implications for practice, where regulatory oversight of external tax advisors remains a significant concern.

  PublisherOA PDFDOI

• The predictive ability of tax contingencies for future income tax cash outflows

  Contemporary Accounting Research · 2023 · 19 citations

  • Business
  • Monetary economics
  • Economics

  Abstract Prior research shows that contingent liabilities do not accurately predict future cash payments due to the managerial discretion afforded by accounting standards. We examine the extent to which current accounting guidance for a material contingent liability—the reserve for unrecognized tax benefits (UTBs) under Financial Interpretation No. 48 (FIN 48)—generates accruals that are predictive of future income tax cash outflows. We document that UTBs fully unwind as cash tax payments over the subsequent 5 years, suggesting that managers, on average, accurately incorporate their expectations of future tax liabilities. This result persists for firms that are (1) most affected by the implementation of FIN 48, (2) unable to impound detection risk into their reserves, (3) engaged in relatively more ex ante tax avoidance, (4) suspected to have engaged in earnings management through the tax accounts, and (5) subject to plausibly exogenous shocks to tax reporting. Overall, our results suggest that current accounting guidance under FIN 48 for contingent tax liabilities enables managers to accurately report, and financial statement users to reliably predict, future cash obligations.

  PublisherDOI

• Competitive Externalities of Tax Cuts

  Journal of Accounting Research · 2021 · 65 citations

  1st authorCorresponding
  • Monetary economics
  • Economics
  • Business

  ABSTRACT We examine how tax cuts that benefit some firms are related to the economic performance of their direct competitors. Consistent with tax cuts decreasing the cost of initiating competitive strategies, we find that a decrease in the tax burden for only a specific group of firms in the U.S. economy (i.e., “rivals”) has a negative economic effect on the performance of its direct competitors not directly exposed to the same tax cut (i.e., “competitors”). This negative externality is stronger when the relatively higher taxed competitors (1) are financially constrained, (2) operate in more competitive markets, (3) have similar products to their lower taxed rivals, (4) face rivals that retain more of their cash tax savings due to lower dividends and share repurchases, and (5) face lower taxed, but financially constrained, rivals. We also find that shareholders and lenders price the negative externality manifested in these competitors’ economic performance.

  PublisherDOI

• The Shareholder Response to Corporate Tax Planning Advice Regulation

  SSRN Electronic Journal · 2020 · 1 citations

  1st authorCorresponding
  • Computer Science
  • Business
  • Accounting
  PublisherDOI

• The Economic Effects of Special Purpose Entities on Corporate Tax Avoidance

  Contemporary Accounting Research · 2019-11-22 · 27 citations

  articleOpen accessCorresponding

  ABSTRACT This study provides the first large‐sample evidence on the economic tax effects of special purpose entities (SPEs). These increasingly common organizational structures facilitate corporate tax savings by enabling sponsor firms to increase tax‐advantaged activities and/or enhance their tax efficiency (i.e., relative tax savings of a given activity). Using path analysis, we find that SPEs facilitate greater tax avoidance such that an economically large amount of cash tax savings from research and development (R&D), depreciable assets, net operating loss carryforwards, intangible assets, foreign operations, and tax havens occur in conjunction with SPE use. We estimate that SPEs help generate over $330 billion of incremental cash tax savings, or roughly 6 percent of total U.S. federal corporate income tax collections during the sample period. Interaction analyses reveal that SPEs enhance the tax efficiency of intangibles and R&D by 61.5 percent to 87.5 percent. Overall, these findings provide economic insight into complex organizational structures supporting corporate tax avoidance.

  PublisherOA PDFDOI

• THE GEOMETRY OF INTERNATIONAL TAX PLANNING AFTER THE TAX CUTS AND JOBS ACT

  National Tax Journal · 2019-11-01 · 21 citations

  article1st authorCorresponding

  The enactment of the so-called Tax Cuts and Jobs Act of 2017 (TCJA) significantly changes the landscape for tax planning and compliance by U.S. multinational corporations (MNCs). The promised shift to a more territorial system actually results in a greater likelihood that more of a U.S. MNC’s foreign income is subject to current U.S. taxation. The TCJA complicates effective tax planning for such firms, forcing them to reexamine their existing global structures and financial arrangements (i.e., the “geometry” of international tax planning). We briefly review international tax planning before the TCJA as well as some key international tax provisions in the TCJA. We then provide a method to estimate the new Global Intangible Low-Taxed Income (GILTI) tax from a U.S. MNC’s financial statements when such information is not publicly disclosed and illustrate the effective tax rate (ETR) and GILTI tax effects for a small sample of public firms after the TCJA. Finally, we discuss some likely changes in international tax planning going forward.

  PublisherDOI

• The Geometry of International Tax Planning After the Tax Cuts and Jobs Act: A Riff on Circles, Squares, and Triangles

  SSRN Electronic Journal · 2019-09-19 · 1 citations

  articleOpen access1st authorCorresponding

  The enactment of the so-called Tax Cuts and Jobs Act of 2017 (TCJA) significantly changes the landscape for tax planning and compliance by U.S. multinational corporations (MNCs). The promised shift to a more territorial system actually results in a greater likelihood that more of a U.S. MNC’s foreign income is subject to current U.S. taxation. The TCJA complicates effective tax planning for such firms, forcing them to reexamine their existing global structures and financial arrangements (i.e., the “geometry” of international tax planning). We briefly review international tax planning before the TCJA as well as some key international tax provisions in the TCJA. We then provide a method to estimate the new Global Intangible Low-Taxed Income (GILTI) tax from a U.S. MNC’s financial statements when such information is not publicly disclosed and illustrate the effective tax rate (ETR) and GILTI tax effects for a small sample of public firms after the TCJA. Finally, we discuss some likely changes in international tax planning going forward.

  Publisher

• Competitive Externalities of Tax Cuts

  SSRN Electronic Journal · 2018-01-01 · 4 citations

  articleOpen access1st authorCorresponding
  PublisherDOI

• The Effects of Competition from S Corporations on the Organizational Form Choice of Rival C Corporations

  Contemporary Accounting Research · 2018-10-17 · 24 citations

  article1st authorCorresponding

  ABSTRACT Subchapter C of the U.S. Internal Revenue Code levies an entity‐level tax on corporate profits, whereas Subchapter S allows corporations meeting specific criteria to elect out of this tax. Despite these differences, C and S corporations regularly compete for customers and capital. We examine whether and the extent to which competition from S corporations influences the future organizational form choice of rival C corporations and explore outcomes of this choice. Using data for 4,462 private U.S. commercial banks grouped by Metropolitan Statistical Area during 1997–2010, we find that greater competition from S corporation banks increases the likelihood that rival C corporation banks convert to Subchapter S status. We estimate that the aggregate first‐year tax savings from S conversion exceed $372 million. Consistent with these savings being used to maintain competitive parity with rivals, we find that converting banks increase their interest rates on customer deposits and advertising intensity. Our findings provide insight into whether competition from tax‐advantaged firms influences the organizational form choice of rival tax‐disadvantaged firms.

  PublisherDOI

Frequent coauthors

• Petro Lisowsky

  18 shared

• Gary A. McGill

  Fisher College

  17 shared

• Michael Mayberry

  University of Florida

  13 shared

• Edmund Outslay

  Michigan State University

  8 shared

• W. Robert Knechel

  University of Auckland

  4 shared

• Will Ciconte

  3 shared

• Paul Demeré

  Bocconi University

  2 shared

• Hye Sun Chang

  2 shared

Awards & honors

• Irwin Jecha Distinguished Professor in Accountancy, Universi…
• Department Executive Officer Fellow, Big Ten Academic Allian…
• PricewaterhouseCoopers LLP Faculty Fellowship, University of…
• RC Data Analytics Scholar, University of Illinois at Urbana-…