Degree Of Tax Avoidance Research Articles

The effect of tax avoidance on earnings persistence: evidence from China

PurposeThe purpose of this paper is to investigate the relationship between tax avoidance and earnings persistence in the light of a developing economy, with the main focus on China.Design/methodology/approachIn the analysis, the author conducts a survey on the tax avoidance situation of Chinese listed companies from 2012 to 2020. Then, a multivariate regression analysis is performed in order to analyse the relationship between corporate tax avoidance and earnings persistence.FindingsThe findings of the present study show that tax avoidance has a significant positive effect on earnings persistence. However, when the degree of tax avoidance is high, the “risk effect” of tax avoidance exceeds the “value effect”, and tax avoidance will reduce the persistence of earnings. This conclusion is even more prominent when the company is non-state-owned. Further research shows the increase of institutional investors’ shareholding ratio can improve “value effect” of tax avoidance, lessen “risk effect” of tax avoidance, and positively affect the relationship between tax avoidance and earnings persistence.Practical implicationsThis study provides evidence for investors to understand the dual effect of tax avoidance on earnings persistence. The results may have implications for regulatory bodies. They can provide a better understanding of the corporate governance role of institutional investors in curbing opportunistic tax avoidance.Originality/valueThis study enriches the research on tax avoidance effects by analysing the impact of tax avoidance on earnings persistence. This study also compensates for the shortcomings of analysing earnings persistence mainly from the perspective of tax differences in the past, and promotes the study of the corporate governance effects of institutional investors under different levels of tax avoidance.

Empirical Investigation of the Impact of Corporate Social Responsibility on Tax Avoidance in Nigeria

The impact of corporate social responsibility (CSR) on tax evasion in Nigeria was the main subject of this study. To do this, information was gathered from the annual reports and accounts of banks listed on the Nigerian stock exchange's floor. Based on the analysis completed, it was determined that return on asset had a favorable link with tax evasion. Tax evasion was found to have a beneficial association with CSR. When examined at the 5% threshold of significance, it was also discovered to be non-statistically significant. The final factor, firm size, was discovered to have a bad correlation with tax evasion. However, a 5% level of significance test revealed that it was not statistically significant. Therefore, it was advised that in order for an organization to avoid paying taxes, it must first make the best use of its resources. Due to the significant costs associated with practicing corporate social responsibility, it is one of the main ways that businesses avoid paying taxes. As a result, the tax burden that is owed by a company is reduced. Additionally, the degree of tax avoidance is not greatly influenced by the size of the company.

Determinasi Pengindaran Pajak pada Perusahaan Sektor Pertambangan yang Terdaftar di Bursa Efek Indonesia

The effect of tax avoidance on profitability, leverage, and growth is investigated for companies in the mining industry listed on the Indonesian Stock Exchange. This study utilizes information obtained from the annual financial reports of the Indonesia Stock Exchange. Purposive sampling is the method chosen as a sampling method with the data collected as secondary data. Data were analyzed with the help of multiple linear regression. The output of this study found that (1) tax avoidance was significantly affected by profitability, leverage, and firm size all at the same time. (2) There was a favorable and statistically significant relationship between income and the degree of tax avoidance. (3) Leverage had a substantial and beneficial effect on the amount of tax avoidance. (4) The size of the business had a notable and positive effect on the amount of tax avoidance

Does common auditor have an impact on corporate tax avoidance? An investigation from the supply chain perspective

AbstractWe find that, at both the audit firm and partner level, having a common auditor in the supply chain has a significant positive association with the supplier company's degree of tax avoidance. Companies report a higher level of tax avoidance when they are audited by an industry‐expert or a tax expert common auditor, when the common audit partner is economically dependent on the supplier company, when the audit client is in a highly competitive industry, and when the company is subject to a high level of information asymmetry. Moreover, we find potential audit quality issues embedded in common audits in the supply chain.

The Impact of Internet Use on Corporate Tax Avoidance: Evidence from Chinese Enterprises

Based on the data of Chinese industrial enterprises from 2004 to 2009, a fixed‐effect model is adopted in this paper to analyze the effect and the mechanism of the enterprises using the Internet on tax avoidance. The result shows that using the Internet will produce the peer effect, which enables enterprises to learn tax avoidance strategies on the Internet and makes the degree of tax avoidance between enterprises and other enterprises in the same industry converge. At the same time, using the Internet has a network effect, and the more the enterprises access the Internet, the higher the degree of tax avoidance for enterprises is. In addition, the effect of the Internet on tax avoidance is influenced by the intensity of tax collection and the nature of enterprises. With a further examination, it has been found that enterprises not only acquire the two tax avoidance strategies of underreporting profits and underpaying taxes through the Internet but also master the planning strategy.

Financing Constraints, Earnings Management and Corporate Tax Avoidance

Based on the data of all A-share listed companies from 2008 to 2019, this paper studies the relationship between financing constraints and the degree of tax avoidance and the influencing path of them. The results show that financing constraints can promote enterprises to avoid tax aggressively. The results of heterogeneity test show that the difference of property rights and enterprise scale will not affect the above results. Further research shows that a high degree of earnings management will enhance the promotion of financing constraints on tax avoidance.

How does the Reform of Social Insurance System Affect Corporate Tax Avoidance? Evidence from a Quasi-natural Experiment of the Transfer of Department in Social Insurance Contributions

As an important reform of social insurance system, the transfer of department in social insurance contributions has a wide and far-reaching impact on both the protection of workers’ rights and enterprises. In 2018, Plan for Deepening the Reform of Party and State Institutions, which was deliberated and adopted at the Third Plenary Session of the 19th CPC Central Committee, pointed out that in order to improve the collection and management efficiency of social insurance funds, the basic endowment insurance, basic medical insurance, unemployment insurance and other social insurance will be uniformly and fully collected by the tax department （the transfer of department in social insurance contributions）. It is proposed to plug the loopholes of social security payment through reform in accordance with the law, so as to make the social security fund grow sustainably, and regulate the social security payment behavior and related financial behavior of enterprises. However, the existing research on the micro enterprise economic consequences of the transfer of department in social insurance contributions is extremely scarce, which only involves the enterprise value and cost markup ratio of enterprises. This paper attempts to analyze the governance effect of the transfer of department in social insurance contributions from the perspective of tax avoidance and take the listed companies of China’s A-share from 2008 to 2018 as the initial sample for empirical test. The research finds that: The degree of tax avoidance is reduced after social insurance contributions are uniformly and fully collected by the tax department. The specific examination of the impact mechanism shows that, after the transfer of department in social insurance contributions, the tax department can master more financial information of enterprises and check their financial accounts through tax collection and audit, which improves the transparency of accounting information, and then restrains enterprise tax avoidance. Further study finds that the governance effect of the transfer of department in social insurance contributions on corporate tax avoidance is only reflected in the enterprises with weak tax collection and management, low audit quality and low analyst attention. From the new perspective of enterprise tax avoidance, this paper understands the governance effect of the transfer of department in social insurance contributions on enterprise financial behavior, enriches the literature on the impact of the transfer of department in social insurance contributions on micro enterprise behavior. The findings are helpful for policymakers to clarify the potential impact of the reform of the transfer of department in social insurance contributions on enterprises, and have policy implications for the government to further optimize social security system.

Will Corporate Tax Avoidance Lead to Forced Executives Turnover?

Based on the data of A-share listed companies in 2004-2018, this paper discusses the possible economic consequences of corporate tax avoidance from the individual level of executives. In this paper, the degree of corporate tax avoidance is divided into aggressive tax avoidance behavior and passive tax avoidance behavior, respectively, to study the impact of different degrees of tax avoidance on executives forced to be replaced by listed companies. It is found that both aggressive tax avoidance and passive tax avoidance will lead to forced executives turnover. In addition, this paper also examines the moderation effects of the nature of property rights, the performance of corporate social responsibility and market concentration on the above-mentioned research, and finds that private companies, companies that perform social responsibility well and companies in areas with fierce market competition, the passive tax avoidance behavior has a greater impact on executives forced turnover.

Corporate dispersion and tax avoidance

PurposeThe purpose of this paper is to investigate the effects of corporate dispersion on tax avoidance from geographical and institutional dispersion perspectives by using evidence from China.Design/methodology/approachUsing a panel data of Chinese listed firms during 2003-2015, this paper estimates with correlation analysis and multiple regression analysis.FindingsBoth geographical and institutional dispersion are negatively associated with the degree of corporate tax avoidance. Furthermore, corporate governance mechanisms and female chief executive officers can mitigate the negative relation between corporate dispersion and tax avoidance. The results also indicate that ineffective internal control is one of the channels through which corporate dispersion reduces tax avoidance.Originality/valueThis is the first paper about the impact of firm dispersion on the degree of tax avoidance, complementing the research content of diversification and corporate decision-making.

Tax Avoidance - Are Banks Any Different?

While the public has noticed the need for the detection of potential tax loopholes and demands further improvement in the taxation of banks, there is scarce empirical evidence whether banks’ degree of tax avoidance actually differs from that of non-banks. We try to close this gap by investigating U.S. banks’ tax avoidance behavior for a sample period from 2004 to 2016. To identify banks’ tax avoidance, we use annual Cash ETRs and GAAP ETRs and compare them to the tax avoidance behavior of non-banks. As there are various channels of tax avoidance, we account for differences in several areas such as corporate fundamentals, the degree of multinationality and regulatory scrutiny. We provide cautious evidence that banks have significantly higher Cash ETRs than non-banks. Using quantile regression, we find evidence that the assocation between banks and ETRs is not constant over the whole tax avoidance distribution, with banks reporting significantly higher ETRs compared to nonbanks in those regions of the tax avoidance distribution which are regularly classified as “high tax avoidance”. In line with recent research, we provide some evidence that the difference in Cash ETRs between banks and non-banks is more pronounced for worse-capitalized, than for better-capitalized banks.

Industrial Policy and Tax Avoidance

Since the past three decades, China’s economy has been growing rapidly. The impact of the rapid development of China’s economy is inseparable from the government, who intervenes in the economic life through laws, policies, regulations, etc. As a way of intervention by the government, the promulgation and implementation of policies have certain purposes. In the capital market, the government changes the financing constraints of companies through the implementation of industrial policies, thus changing their tax avoidance behaviors. This paper selects the listed companies in Shanghai and Shenzhen during the Tenth Five-Year Plan and the Twelfth Five-Year Plan of National Economy and Social Development as the sample to analyze the influence of Chinese industrial policy on the tax avoidance behavior of enterprises and their internal mechanism. Our study finds that firms that are supported by industrial policies have been able to ease their financial constraints and have a lower degree of tax avoidance than those that are not supported by industrial policies. Further analysis finds that the above phenomenon is more pronounced in the non-state-owned enterprises and the regions with weaker tax enforcement. Our study not only enriches the academic literature on the microscopic mechanism of industrial policy, but also provides new empirical evidence on the factors of corporate tax avoidance.

The Effect of Tax Reforms on the Association between Tax Avoidance and Ownership Structure

State-owned shares are a characteristic ownership structure of listed firms in China. This study examines the effect of the 2008 tax reforms on tax avoidance activities for firms with different ownership types. We find that the higher percentage of government-controlled shares in firms’ ownership structure, the higher is the degree of tax avoidance. Furthermore, we classify government-controlled shares into directly or indirectly owned by the state and document that indirect firms have a higher complexity of hierarchical relations to conduct more tax avoidance than direct firms. However, tax avoidance behavior becomes less obvious for state-owned firms after enacting the 2008 tax reforms.

The relationship between state ownership and tax avoidance level: empirical evidence from Vietnamese firms

This paper investigates the relationship between tax avoidance behavior and state-ownership level at corporates in Vietnam to find out whether state-ownership influence the tax avoidance behavior of Vietnamese firms. Effective tax rate presents for the tax avoidance level, in which higher effective tax rate means the lower tax avoidance level. In this research, the authors check robustness by using different methods to calculate the level of tax avoidance of corporates. Using Feasible Generalized Least Squares (FGLS) method with data of 460 enterprises listed on Vietnam Stock Exchange market from 2009 to 2015, the empirical result shows that the level of state ownership has an inverse relationship with tax avoidance behavior of corporates. In other words, the higher level of state-owned is, the fewer taxes they avoid. Empirical evidence also confirms that low concentration (≤ 30%) of state ownership has a positive effect on tax avoidance behavior. Besides that, size, firm performance, tangible assets level, and debt ratio have a meaningful positive relationship with the degree of tax avoidance, similarly prior studies.?

기업의 조세전략이 투자의사결정에 미치는 영향

본 연구에서는 경영자의 투자의사결정을 중심으로 하여 조세전략과 투자효율성 간의 관계를 분석하고자 한다. 구체적으로, 경영자의 조세회피 행태가 기업의 투자수준에 미치는 효과를 살펴보고자 한다. 분석 결과, 경영자의 조세회피 수준이 높아질수록 기업의 과잉투자가 증가하는 결과를 보였다. 이는 조세회피로 인하여 증가한 기업의 가용자금이 과잉투자로 이어진다는 것을 의미하며, 조세회피를 통한 가용자금의 증가분이 경영자의 기회주의적인 목적을 위해 이용되어지는 것으로 해석된다. 지금까지의 선행연구를 살펴보면, 기업의 조세전략이 기업가치에 미치는 영향에 대한 분석에 앞서 그 메커니즘에 대한 연구가 선행되어야 함에도 불구하고 기업가치에 영향을 주는 경영자의 의사결정들과 조세전략과의 관련성을 본 연구는 드물다. 따라서 본 연구는 경영자의 핵심적인 행태 중 하나인 조세전략이 기업의 실제 투자의사결정에 미치는 영향에 대한 구체적인 결과를 제시하였다는 점에서 공헌점이 존재한다. 즉, 투자자와 세수를 확보하고자 하는 정부는 경영자의 조세회피 행태가 투자행태에 미치는 영향을 감안하고, 경영자의 조세회피 행위에 보다 경각심을 기울이게 할 것이라고 기대된다. We investigate the association between tax strategy and investment efficiency focusing on manager's investment decision. Specifically, we examine the effect of manager's tax avoidance on the firm's investment level. The result show that as the degree of tax avoidance becomes higher firm's over investment increases. This result implies that the available resources generated from firm's tax avoidance induces over investment. Prior researches have been interested in the effects of firm's tax strategy on firm value. However, there is little literatures regarding the effects of firm's tax strategy on management's real investment decisions which provides the important implications about the mechanisms between tax strategy and firm value. In this respect, our research provides a meaningful results which demonstrates the effects of firm's tax strategy on manager's real investment decisions. This will provide useful implications for the investors and government regarding manager's tax avoidance behavior.