The Role of Managerial Ability in Corporate Tax Avoidance

2017 ◽  
Vol 63 (10) ◽  
pp. 3285-3310 ◽  
Author(s):  
Allison Koester ◽  
Terry Shevlin ◽  
Daniel Wangerin
Keyword(s):  
Tax Avoidance ◽  
Managerial Ability ◽  
Corporate Tax

Do IRS Audits Deter Corporate Tax Avoidance?

2012 ◽  
Vol 87 (5) ◽  
pp. 1603-1639 ◽  
Author(s):  
Jeffrey L. Hoopes ◽  
Devan Mescall ◽  
Jeffrey A. Pittman
Keyword(s):  
Tax Avoidance ◽  
Tax Rates ◽  
Coefficient Estimates ◽  
Corporate Tax ◽  
Effective Tax Rates ◽  
Tax Enforcement ◽  
Public Firms ◽  
Large Samples ◽  
Percentage Points

ABSTRACT We extend research on the determinants of corporate tax avoidance to include the role of Internal Revenue Service (IRS) monitoring. Our evidence from large samples implies that U.S. public firms undertake less aggressive tax positions when tax enforcement is stricter. Reflecting its first-order economic impact on firms, our coefficient estimates imply that raising the probability of an IRS audit from 19 percent (the 25th percentile in our data) to 37 percent (the 75th percentile) increases their cash effective tax rates, on average, by nearly two percentage points, which amounts to a 7 percent increase in cash effective tax rates. These results are robust to controlling for firm size and time, which determine our primary proxy for IRS enforcement, in different ways; specifying several alternative dependent and test variables; and confronting potential endogeneity with instrumental variables and panel data estimations, among other techniques. JEL Classifications: M40; G34; G32; H25.

scholarly journals derivative on the value relevance through tax avoidance and earnings control

2022 ◽  
Vol 6 ◽  
Author(s):  
Suhendra Suhendra ◽  
Etty Murwaningsari ◽  
Sekar Mayangsari
Keyword(s):  
Earnings Management ◽  
Value Relevance ◽  
Tax Avoidance ◽  
Moderating Effect ◽  
Corporate Tax ◽  
High Tendency ◽  
Positive Effect

This investigation expects to inspect and analyze the effect of derivative transactions on earnings management, the role of corporate tax avoidance in  moderating effect of derivative transactions on earnings management, the effect of earnings management worth pertinence of earnings, and the effect of derivative transactions Worth Pertinence of earnings. This examination utilizes information from non-monetary organizations in Indonesia and Thailand for the period 2013-2017 with 91 test of organizations. This investigation, earnings management is calculated based on the Jaggi model and the Jaggi changed model. The value relevance of earnings is calculated based on Ohlson's model. Corporate tax avoidance is calculated based on the book tax difference. The results show that subordinate exchanges have a constructive outcome on earnings management. Corporate tax avoidance has not been proven to strengthen the effect of derivative transactions on earnings management. Earnings management adversely influences the worth pertinence of earnings. Derivative transactions negatively affect the value relevance of earnings. Derivative transactions, especially those with non-hedging criteria, show a high tendency towards earnings management activities. Intercountry testing, derivative transactions have a positive effect on earnings management in Indonesia while in Thailand it does not.

scholarly journals FEMALES IN GOVERNANCE AND CORPORATE TAX AVOIDANCE: THE MODERATING EFFECT OF ACCOUNTING CONSERVATISM

2020 ◽  
Vol 24 ◽  
Author(s):  
Salami Suleiman
Keyword(s):  
Audit Committee ◽  
Tax Avoidance ◽  
Accounting Conservatism ◽  
Corporate Tax ◽  
Bottom Line ◽  
Positive Effects ◽  
Female Directors ◽  
Ex Post ◽  
Academic Researchers

High cash outflow in the form of corporate taxes reduces the corporate firms’ liquidity, available funds for re-investment and growth opportunities. Corporate firms’ attention is therefore geared towards ensuring minimum tax liability. The purpose of this study is to examine the effect of females’ presence in the governance on corporate tax avoidance, moderating for the role of accounting conservatism. The study is based on the companies listed on the Nigerian Stock Exchange and utilised the ex-post factor research design. The panel corrected standard regressions was employed to test the hypothesis. Female CEO, percentage of female directors and presence of female in the audit committee have significant positive effects on tax avoidance. The moderating for accounting conservatism, the percentage of female directors on the board and female director presence in the audit committee remains significant. The findings may be of interest to the academic researchers, investors and regulators. For academic researchers, it is interested in discovering whether females’ presence in the governance affect tax avoidance and the moderating role accounting conservatism. For investors, it shows that women in the boardroom can improve the bottom line financial performance through tax reduction strategies.This study extends the existing literature by examining the mediating role of accounting conservatism on the relationship between females in governance and tax avoidance in the Nigerian context.

scholarly journals The Decreasing Trend in U.S. Cash Effective Tax Rates: The Role of Growth in Pre-tax Income

2020 ◽  
Author(s):  
Alexander Edwards ◽  
Adrian David Kubata ◽  
Terry Shevlin
Keyword(s):  
Convex Function ◽  
Avoidance Behavior ◽  
Tax Avoidance ◽  
Downward Trend ◽  
Tax Rates ◽  
Corporate Tax ◽  
Effective Tax Rates ◽  
Over Time ◽  
Stable Linear

We develop a linear corporate tax function where taxes paid are regressed on pre-tax income and an intercept. We show that if the intercept is positive, cash ETRs are a convex function of pre-tax income. We present large sample evidence consistent with this ETR-convexity. Thus, although firms may have stable linear tax functions (i.e., constant parameters in the linear tax model) representing stable tax avoidance behavior, ETRs can change over time because of growth in pre-tax income. Consequently, simply examining changes (or differences) in cash ETRs is nondiagnostic about whether tax avoidance has changed over time (or differs across firms). We illustrate our argument by showing that all of the observed downward trend in cash ETRs documented by Dyreng et al. (2017) can be explained by growth in pre-tax income. The wholesale concern about increased tax avoidance over time might be overstated.

scholarly journals The Association Between Corporate Tax Avoidance And Audit Efforts: Evidence From Korea

2016 ◽  
Vol 33 (1) ◽  
pp. 153-172
Author(s):  
Seong Ho Bae
Keyword(s):  
Stock Exchange ◽  
Tax Avoidance ◽  
Exchange Market ◽  
Corporate Tax ◽  
Audit Risk ◽  
External Auditors ◽  
Audit Planning ◽  
And Control ◽  
Corporate Information

The purpose of this paper is to verify external auditors’ behavior toward corporate tax avoidance (hereafter ‘CTA’) via audit efforts. In particular, this study examines the effect of CTA on actual audit hours and abnormal audit hours (i.e., auditor perception of corporate tax avoidance as a risk factor). For the successful CTA, the managers have incentives to render corporate information environments more complex and opaque, and as a result exacerbate information asymmetries. And some real-world cases of CTA suggest that it is closely related to the principal-agent regime. These negative aspects of CTA may increase inherent and control risk of audit risks. Considering the monitoring role of external auditing, the auditors may respond to increased inherent and control risks which are consequent to CTA. And the auditor responses are expected to reflect directly in audit hours. For this empirical question, this paper used 2,588 firm-year observations from Korea stock exchange market in the period 2001-2010. We found that in response to increased audit risk from CTA, auditors increased the number of actual audit hours or devoted more audit hours than normal to achieve a given level of audit risk. This study contributes to the literature and auditing practices by extending the auditing and tax literature on the examination of auditor behavior toward CTA and by implying the firms’ CTA behavior is one of the audit risk factors that affect audit planning, respectively. 

Sign in / Sign up

Export Citation Format

Share Document