Corporate Tax Avoidance and Firm Value (original) (raw)

Tax Avoidance and Firm Value: A Two-Stage Regression Analysis

IAR Consortium, 2021

Enterprises engaged in tax avoidance activities, the purpose of which is either paying less tax or deferring tax payment. Therefore, the purpose of this study is to investigate the relationship between tax avoidance and firm value. This study used public listed companies on the T aiwan Stock Exchange over the period 2010-2017, based on empirical regression analysis to study the effects of tax avoidance behavior on firm value, and measured with effective tax rates as tax avoidance measures. T he empirical results show that corporate tax avoidance will be reflected in the reduction of the effective tax rates (ET R) and the expanding of the book-tax differences (ET R), which will have a significant negative impact on the value of the enterprise, that is, the reduct ion of the effective tax rate enables the enterprise to pay less tax and raise the firm value. Moreover, when the financial income of enterprises is greater than the income from taxation, the higher the degree of corporate tax avoidance, the higher the ent erprise value.

Corporate Governance, Tax Avoidance, and Firm Value

2018

This study aims to examine: (1) the influence of institutional ownership, independent commissioners on tax avoidance on firm value (2) the influence of tax avoidance on firm value (3) the influence of institutional ownership, independent commissioner to firm value mediated by tax avoidance. The population of this study are manufacturing companies listed on the Indonesian Stock Exchange for the study from 2013-2016. This study purposive sampling and arrived at 92 firms, using path analysis technique. The results of this study indicates that (1) institutional ownership significantly influence tax avoidance (2) independent commissioners have no influence on tax avoidance; (3) institutional ownership does not influence the firm value; (4) independent commissioner and tax avoidance have significant effect to firm value; (5) tax avoidance does not mediate the institutional ownership relationship to firm value. Keywords: Executive Incentives, Firm Value, Independent Commissioners, Institut...

Corporate Tax Avoidance and Firm Value: Evidence from Brazil

SSRN Electronic Journal, 2016

This paper investigates the relation between corporate tax avoidance and firm value in Brazil. Although one might expect that tax avoidance activities result in shareholder value generation, alternative theories suggest this is not always the case; implicit agency costs have been recently detected by the literature, may exceed the tax saving benefits, causing shareholder value destruction instead. It was held a panel data analysis to verify what happens including 323 publicly traded companies in the stock market from 2006 to 2012, totalizing 1,704 firm-year type observations. It was adopted BTD, controlled by total accruals, such as proxy for tax avoidance and Tobin's q as proxy for firm value. The results showed that tax avoidance and firm value are negatively associated. It was also evaluated the corporate governance effect, finding limited disclosures that can mitigate to value destruction.

Corporate Tax Avoidance and Firm Profitability

The idea of trying to reduce an organization's tax expense is considered as old as the inception of taxation itself as organizations are always trying to exploit loopholes in the complexities of the existing tax system. The traditional motive for such practices is to reduce expenses, thereby increasing the firm's net profit. In view of this, tax avoidance has always been considered as being in the interest of the shareholders, as it is intended to increase value. However, this view has greatly been questioned in recent researches. Taking data from the annual reports and financial statements of firms listed on the Ghana Stock Exchange (GSE), we empirically tested whether tax avoidance of a firm really translates to increase in value or profitability. Employing a standard Ordinary Least Square regression model, we test our hypotheses using SPSS statistical tools. Our findings confirmed a negative relationship between the tax avoidance measure (ETR) and the measure of profitability (ROA). We conclude that tax avoidance could translate into profitability or value due to the balance of expertise and professionalism exhibited. We recommend that a firm need to have a good corporate governance structure in place, particularly the board structure, since they are in a better position to influence management's decisions and actions, in order to achieve the intended benefits of such practices.

A reexamination of the theory of agency costs of tax avoidance

2017

Reduction in a corporation’s tax payouts should generally increase shareholder wealth. Recent studies, however, argue that shareholders do not always benefit from corporate tax avoidance. When manager-shareholder interests are misaligned, managers can appropriate shareholder wealth under the garb of tax-saving projects. In that case, corporate tax avoidance could be associated with reduced shareholder wealth. The empirical evidence on this theory is, however, mixed. We reexamine this theory in an international context looking at dual-class-shares firms which has two advantages. First, dual-class corporate governance structure characterizes an extreme case of divergence between ownership and control rights and thus the size of the voting premium represents a lower bound on the magnitude of managerial consumption of private benefits of control. Second, the variation in country-level external legal enforcement, that determines the protection of outside shareholder interests, amplifies ...

The Effect of Good Corporate Governance and Tax Avoidance to Firm Value

The purpose of this study is to analyze the effect of Good Corporate Governance which is proxied by Institusional Ownership, Managerial Ownership, Proportion of Independent Comisioner, and Audit commitee and tax avoidance which is proxied by Cash Effective Tax Rate to Firm Value which is proxied by Tobin‘s Q. This study uses companies listed to Kompas100 Index for July 2016February 2017 period in 2010-2015. This study uses Quantitative Research Method. This study uses Multiple Regression Analysis with Eviews version 9. Based on hypotesis test results, Cash Effective Rate, Institusional Ownership, Managerial Ownership, Proportion of Independent Comissionary, Audit Commitee have effect Firm Value. Partially, Cash effective tax rate have no significant effect on firm value as well as Managerial ownership, Proportion of Independent commisionary, and Audit Commitee. In this study only Institusional Ownership has an effect significantly with firm value.

Corporate ownership, governance and tax avoidance: An interactive effects

Although tax avoidance practices are as old as taxes themselves, the ways they are being perpetrated among corporate taxpayers have transmuted so sophisticated in recent times. This study thus proposes models for empirical investigations into the relationship between corporate ownership structure and corporate tax avoidance in Malaysia. It was argued, based on cost/benefits consideration of tax avoidance, that family; foreign and government ownerships could be associated with corporate tax avoidance among Malaysian listed companies. The study further proposes that strong governance mechanism could mitigate such association. Two econometrics dynamic panel data models are proposed for the investigation. Generalized Method Moment (GMM) estimator is recommended as the estimation method.

Corporate Governance, Incentives, and Tax Avoidance

This paper examines the link between corporate governance, managers' incentives, and tax avoidance. We take the perspective that tax avoidance is simply one of many investment projects faced by the firm and agency problems may cause the manager to over-or under-invest in tax avoidance relative to the desire of shareholders. Using quantile regression, we find that the impact of corporate governance on firms' tax avoidance appears to be most pronounced in the upper and lower tails of the tax avoidance distribution, which is arguably the area of most interest to researchers and regulators. Specifically, we find that that more financially sophisticated and independent boards are positively associated with tax avoidance at the lower end of the tax avoidance distribution and are negatively associated with tax avoidance at the upper end of the tax avoidance distribution. This suggests that corporate governance is associated with the degree of tax avoidance by firms.

Analysis Of The Effect Of Good Corporate Governance, Company Profitability And Risk On Tax Avoidance

Fokus Bisnis : Media Pengkajian Manajemen dan Akuntansi, 2020

Taxes are one of the main sources of state revenue. The difference in interests between tax authorities and companies based on agency theory will lead to non-compliance by taxpayers or company management which has an impact on companies to do tax avoidance. Tax avoidance actions taken by companies can cause tax revenue by the state to be not optimal. This study aims to analyze the factors that influence tax avoidance. The variables used are GCG, Profitability, and Company Risk to assess the extent to which these variables affect tax avoidance. Based on the purposive sampling method with the period 2017 to 2019, a total of 54 samples from 18 companies were obtained. Hypothesis testing is carried out using multiple linear regression analysis. The results showed that the indicators of corporate risk variables had a positive effect on tax avoidance; the audit committee variable has a negative effect on tax avoidance; Independent commissioner variable, institutional ownership and profita...