Tax Avoidance and Firm Value: A Two-Stage Regression Analysis (original) (raw)
Related papers
Tax Avoidance: Determinant Factors and Impact on Firm Value
2020
Introduction: Tax management aims to organize the company for tax avoidance while maintaining the firm value. Background Problems: Different points of interests between taxpayers and government lead realization of tax revenue target could not achieved. Purpose: This research aims to analyze characteristics of companies’ tax avoidance that listed on the Indonesia Stock Exchange and determinants of tax avoidance and the impact toward firm value. Research Methods: Descriptive and panel data analysis were used to examine sample in this study which covered non-financial companies that constantly profitable and registered in LQ45 index for February 2014 to July 2019 periods. Findings & Conclusions: The results revealed companies on the average have made tax payments in accordance with applicable regulations. Profitability and firm size positively affected tax avoidance whereas tax avoidance insignificantly affect to overall firm value. However, tax avoidance indicated significant negative...
Analysis of Tax Avoidance Effect on Firm Value (A Study on Firms Listed on Indonesia Stock Exchange)
There are many factors that can affect firm value, including taxation. Taxes paid by firms to the government is a quite significant burden that firms often commit tax avoidance in order to minimize tax expense. The objective of this research is to examine the effect of tax avoidance committed by firms on the value of firms listed on Indonesia Stock Exchange in 2009-2016. The proxy for firm value in this research is Price to Book Value per Share (PBVS), while the proxy for tax avoidance is Effective Tax Rates (ETR). The final samples used in this study include 2,276 observations. From the result of fixed effect method unbalanced panel data regression, it can be concluded that tax avoidance, which is measured by effective tax rate, does not significantly affect firm value. This implies that 1) the sample firms do not use tax avoidance as an instrument to increase their firm value and 2) the investors no longer value the tax avoidance activities as an alternative to increase firm value since it has some risks that potentially will be faced by the firm in the future if there is an investigation executed by taxation authority. The firms should perform the other value-added activities to increase their firm value rather than tax avoidance activities.
Corporate Tax Avoidance and Firm Value
Do corporate tax avoidance activities advance shareholder interests? This paper tests alternative theories of corporate tax avoidance that yield distinct predictions on the valuation of corporate tax avoidance. Unexplained differences between income reported to capital markets and to tax authorities are used to proxy for tax avoidance activity. These "book-tax" gaps are shown to be larger when firms are alleged to be involved in tax shelters. OLS estimates indicate that the average effect of tax avoidance on firm value is not significantly different from zero, but is positive for well-governed firms as predicted by an agency perspective on corporate tax avoidance. An exogenous change in tax regulations that affected the ability of some firms to avoid taxes is used to construct instruments for tax avoidance activity. The IV estimates yield larger overall effects and reinforce the basic result that higher quality firm governance leads to a larger effect of tax avoidance on firm value. The results are robust to a wide variety of tests for alternative explanations. Taken together, the results suggest that the simple view of corporate tax avoidance as a transfer of resources from the state to shareholders is incomplete given the agency problems characterizing shareholder-manager relations.
Analysis of Factors that Influence Tax Avoidance and Firm Value
The Indonesian Accounting Review, 2018
The aim of this study is to examine and analyze factors that influence tax avoidance and firm value. The independent variables used in this study are audit quality and profitability, while the dependent variable is firm value, and the intervening variable is tax avoidance. The sample used in this study is banking sector companies in Southeast Asia that listed in www.orbis.bvdinfo.com for the period 2014-2016. The technique of data analysis used in this study is multiple regression analysis with SPSS 22.0 For Windows Program and path analysis. The results of this study show that audit quality has no influence on tax avoidance, but profitability has influence to tax avoidance. Audit quality, profitability, and tax avoidance have influence on firm value, while tax avoidance cannot mediate the influence of audit quality and profitability on firm value.
How Does Tax Avoidance Affect Firm Value? (Lessons from Soe and Indonesian Private Companies)
Indonesian Journal of Business and Entrepreneurship
Taxes are the main source of state revenue and become an important factor for the running of government and development of the country with the largest contribution coming from corporate income tax. Different objectives of business ownership result in different tax management. This study analyzes the characteristics of tax avoidance, determinants and influences on firm value in state-owned and private companies. This study uses secondary data sources in the form of quarterly company financial statements, company stock price reports, and other related data. Descriptive and panel data analysis were used to examine the sample in this study which includes non-financial companies that are continuously profitable and listed in the LQ45 index for the period February 2014 to July 2019. The results of the study explain that private companies are more dominant in tax avoidance conduct compared to State-Owned Enterprises (SOEs). The determinants that influence the tax avoidance of SOEs are ROA and firm size, whereas in private companies there are no determinants that have a significant effect. There is significant negative impact in State-owned companies from tax avoidance on the firm value, while private company does not have a significant effect.
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.
Firm Value is one of the investor's perceptions of company success level that is reflected on stock prices. High stock prices make the value of companies higher. Several factors can affect firm value, including firm size, profitability, and tax avoidance. The sample used in this study is miscellaneous industry sector companies listed on the Indonesia Stock Exchange in the period of 2015-2019. This study used the Partial Least Square (PLS) method. The analysis technique used in this study is the inner model analysis and hypothesis testing. The result of this study showed that firm size and tax avoidance do not affect firm value, and profitability has a positive and significant effect on firm value while firm size does not affect tax avoidance and profitability has a negative and significant effect on tax avoidance. However, tax avoidance is unable to mediate the effect of firm size and profitability on firm value. The coefficient determination test results indicate that the firm value variable can be explained by the variation of variable firm size, profitability, and tax avoidance is 44,7%, and the remaining 55,3% is explained by other independent and intervening variables which are not examined in this study. While tax avoidance variable can be explained by the variation of variable firm size, profitability, and firm value is 20% and remaining 80% is explained by other independent and dependent variables which are not examined in this study.
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.
Tax amnesty and company value: Testing tax avoidance as an intervening variable
Investment Management and Financial Innovations
This study aims to examine the relationship between tax amnesty on company value, analyze the role of tax avoidance behavior to determine the direct and indirect relationship of tax amnesty on company value. The population of this study are manufacturing companies listed on the Indonesia Stock Exchange after the implementation of the tax amnesty in Indonesia in 2017–2020. The sample includes 54 companies in order to obtain 216 observational data points. A multiple linear regression model was used to analyze the relationship between the variables. The tests carried out include partial coefficient tests and model accuracy tests. The results of the study reveal that tax amnesty increases the company’s efforts to do tax avoidance. Second, the tax amnesty granted by the government could increase the value of a company. Third, success in tax avoidance efforts has an impact on increasing the value of a company. Fourth, tax avoidance mediates the relationship between tax amnesty and firm va...