SAS Code - Income Shifting Measure (Klassen & Laplante 2012 JAR)

• Description
  SAS code that generates the variables (in 5-year averages) needed to run an income shifting test based on Klassen and Laplante (2012). Subscription to WRDS is required.

• Output File Name
  IncomeShift.sas7bdat

• Main Output Variables
  GVKEY CIK FIC SIC Datadate Fyear AvgFTR(Tax Incentive) AvgROS(Average Worldwide Return) AvgFROS(Average Foreign Return) AvgDROS(Average Domestic Return) AvgFsale(Average Foreign Sales) AvgDsale(Average Domestic Sales) Avgrd_sale(Average R&D) avgads_sale(Average Advertising Expense) avgintan_sale(Average Intagible Asset) avgcash_at(Average Cash) avgdebt_at(Average Debt) avgsize(Average Asset in logs)

• Comments
  Best practices from prior literature:
  • Exclude obs where FIC is not USA.
  • Remove utilities and financial institutions.
  • Constrain fiscal years to 1997 - 2017 (i.e., pre-TCJA).
  • Include firm-level controls in regressions (included in output file).
  Please email me if you spot any errors or have suggestions - much obliged!