Home Country Tax System Characteristics and Corporate Tax Avoidance: International Evidence

2011 ◽  
Author(s):  
T. J. Atwood ◽  
Michael S. Drake ◽  
James N. Myers ◽  
Linda A. Myers
Keyword(s):  
Home Country ◽  
Tax Avoidance ◽  
Corporate Tax ◽  
Tax System ◽  
International Evidence ◽  
System Characteristics

Home Country Tax System Characteristics and Corporate Tax Avoidance: International Evidence

2012 ◽  
Vol 87 (6) ◽  
pp. 1831-1860 ◽  
Author(s):  
T. J. Atwood ◽  
Michael S. Drake ◽  
James N. Myers ◽  
Linda A. Myers
Keyword(s):  
Tax Avoidance ◽  
Data Availability ◽  
Tax Rates ◽  
Corporate Tax ◽  
Tax System ◽  
Earnings Volatility ◽  
Variable Pay ◽  
Country Factors ◽  
Specific Factors ◽  
System Characteristics

ABSTRACT We examine whether three tax system characteristics—required book-tax conformity, worldwide versus territorial approach, and perceived strength of enforcement—impact corporate tax avoidance across countries after controlling for firm-specific factors previously shown to be associated with tax avoidance (i.e., performance, size, operating costs, leverage, growth, the presence of multinational operations, and industry) and for other cross-country factors (i.e., statutory corporate tax rates, earnings volatility, and institutional factors). We find that, on average, firms avoid taxes less when required book-tax conformity is higher, a worldwide approach is used, and tax enforcement is perceived to be stronger. However, the relations between tax avoidance and all three tax systems characteristics are contextual and depend on the extent to which management compensation comes from variable pay, including bonuses, stock awards, and stock options. Data Availability: Data are available from sources identified in the text.

Corporate tax avoidance and cost of equity capital: international evidence

2019 ◽  
Vol 52 (29) ◽  
pp. 3123-3137
Author(s):  
Hong Min Chun ◽  
Grace Il-Joo Kang ◽  
Sang Ho Lee ◽  
Yong Keun Yoo
Keyword(s):  
Tax Avoidance ◽  
Equity Capital ◽  
Cost Of Equity Capital ◽  
Cost Of Equity ◽  
Corporate Tax ◽  
International Evidence

scholarly journals Relation between Auditor Quality and Tax Aggressiveness: Implications of Cross-Country Institutional Differences

2016 ◽  
Vol 35 (4) ◽  
pp. 105-135 ◽  
Author(s):  
Kiridaran Kanagaretnam ◽  
Jimmy Lee ◽  
Chee Yeow Lim ◽  
Gerald J. Lobo
Keyword(s):  
Tax Avoidance ◽  
Litigation Risk ◽  
Corporate Tax ◽  
Indicator Variable ◽  
Tax Aggressiveness ◽  
Institutional Determinants ◽  
Auditor Quality ◽  
Institutional Differences ◽  
Market Pressure ◽  
System Characteristics

SUMMARY Using an international sample of firms from 31 countries, we study the relation between auditor quality and corporate tax aggressiveness. Employing an indicator variable for tax aggressiveness when the firm's corporate tax avoidance measure is within the top quintile of each country-industry combination, we find strong evidence that auditor quality is negatively associated with the likelihood of tax aggressiveness, even after controlling for other institutional determinants such as home-country tax system characteristics. We also find that the negative relation between auditor quality and the likelihood of tax aggressiveness is more pronounced in countries where investor protection is stronger, auditor litigation risk is higher, the audit environment is better, and capital market pressure is higher. JEL Classifications: M42; M48; H20; F30.

Earnings Management in Response to Corporate Tax Rate Reduction Under an Imputation Tax System

2019 ◽  
Vol 54 (01) ◽  
pp. 1950002
Author(s):  
Nan-Ting Kuo ◽  
Cheng-Few Lee
Keyword(s):  
Earnings Management ◽  
Tax Avoidance ◽  
Rate Reduction ◽  
Rent Extraction ◽  
Corporate Tax ◽  
Tax System ◽  
Tax Rate ◽  
Tax Benefits ◽  
Tax Savings ◽  
Institutional Shareholders

Our study explores how firms respond to a tax rate reduction under an imputation tax system. By exploring Taiwanese data, we find that firms engage in significant downward earnings management preceding a tax rate reduction, and this earnings management behavior reverses in the following year. We further explore what factors drive this finding, given that corporate tax avoidance reduces shareholder imputation credits and thus generates limited tax benefits to most shareholders. We argue and find evidence that three factors explain the tax-induced earnings management: (1) financing benefits from tax savings, (2) managerial rent extraction, and (3) the influence of foreign and domestic institutional shareholders. Our results suggest that factors other than shareholder tax benefits have significant effects on corporate tax avoidance, suggesting that firms still have strong incentives to avoid taxes under an imputation tax system.

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