Note(s): This table reports the regression discontinuity coefficients for the pre-test periods. The table reports the Localized Effects for both the local linear and quadratic regression discontinuity coefficients using the MSE optimal bandwidth measure. The table reports the pre-CCAR (2001–2010) and the pre-Recession (2001–2007) results for the annual Cash Effective Tax Rate in Panel A and the TAI (composite measure by equally weighting the cash tax aggressiveness and the GAAP Tax aggressiveness) in Panel B. Regressions are triangular kernel weighted and are restricted to having at least 50 observations within the selected optimal bandwidth. Control variables include the first 12 bank characteristics shown in Table 2. All regressions include bank and year-fixed effects. Standard errors are clustered at the bank level and are reported in parentheses while observation counts are reported in brackets. ***, ** and * indicate significance at the 1%, 5% and 10% levels, respectively

Source(s): Authors’ own work