scholarly journals Tax Avoidance and M&A

2020 ◽  
Vol 5 (3) ◽  
pp. p142
Author(s):  
Joohyun Lim
Keyword(s):  
Information Asymmetry ◽  
Negative Relationship ◽  
Tax Avoidance ◽  
Corporate Opacity ◽  
And Control ◽  
The Relationship ◽  
Monitor And Control

This paper examines the relationship between tax avoidance and M&A efficiency in the sample of 243 completed M&As in Korea. I find a negative relationship between tax avoidance and M&A returns. This result suggests that tax avoidance increases information asymmetry between shareholders and managers because it increases corporate opacity. It makes shareholders unable to monitor and control even if managers make opportunistic M&A decisions.

scholarly journals Company Reputation, Implied Cost of Capital and Tax Avoidance: Evidence from Korea

2020 ◽  
Vol 12 (23) ◽  
pp. 9997
Author(s):  
Imhyeon Kim ◽  
Jinsoo Kim ◽  
Jeongyeon Kang
Keyword(s):  
Stock Market ◽  
Cost Of Capital ◽  
Corporate Sustainability ◽  
Linear Regression Analysis ◽  
Negative Relationship ◽  
Tax Avoidance ◽  
Implied Cost Of Capital ◽  
Significant Negative Relationship ◽  
Company Reputation ◽  
The Relationship

This study aims to investigate the relationship between company reputation and the implied cost of capital in Korean companies from 2003 to 2016, based on research by Cao et al. (2015). In addition, we would like to examine the effect of tax avoidance. Company reputation increases corporate sustainability and enables sustainable management. In this study, Brandstock Top Index (BSTI), which represents Korea’s top 100 brands, was used as an interest variable representing company reputation. To examine the relationship between company reputation and implied cost of capital, the multiple linear regression analysis was conducted using various measures of implied cost of capital as a dependent variable. As a result of empirical analysis, company reputation and implied cost of capital showed a significant negative relationship. The higher the company’s reputation, the less information asymmetry in the stock market, indicating that the implied cost of capital decreases. A significant negative relationship between company reputation and implied cost of capital was not found in a group that was aggressive in tax avoidance. The contributions of this study are as follows. First, we presented the empirical result that company reputation and implied cost of capital were negatively related in Korea. It showed empirically the importance of company reputation in the Korean stock market. Second, in addition to the relationship between company reputation and implied cost of capital, prior research was expanded considering tax avoidance.

scholarly journals Analysis of Tax Amnesty Disclosures, Tax Avoidance, and Firm Value

2019 ◽  
Vol 1 (1) ◽  
pp. 21
Author(s):  
Arie Pratama
Keyword(s):  
Linear Regression ◽  
Multiple Linear Regression ◽  
Firm Value ◽  
Negative Relationship ◽  
Tax Avoidance ◽  
Accounting Standards ◽  
Financial Accounting ◽  
Tax Amnesty ◽  
The Relationship ◽  
Avoidance Level

This research tried to investigate the relationship between tax amnesty disclosures, as mandated by Indonesia’s Statement of Financial Accounting Standards (SFAS) No. 70, the level of tax avoidance, and the firm value. This research used 34 samples of public listed companies that participate in 2016 tax amnesty program. Researcher used spearman-rho correlation coefficient and multiple linear regression to analyze the data. This research showed two results. First, there is a moderate negative relationship between tax amnesty disclosure level and tax avoidance level, indicate that necessity for tax amnesty disclosure will be reduced if the company had the lower level of tax avoidance. Second, this research also showed that tax avoidance level and tax amnesty disclosure level had the negative significant effect toward firm value. It is implied that tax amnesty and tax avoidance were two negative actions that reduce the investor trust’s in the company.

scholarly journals Pyramid ownership structure and tax avoidance among Canadian firms

2019 ◽  
Vol 33 (1) ◽  
pp. 16-33 ◽  
Author(s):  
Justin Mindzak ◽  
Tao Zeng
Keyword(s):  
Ownership Structure ◽  
Empirical Work ◽  
Tax Avoidance ◽  
Content Type ◽  
Listed Firms ◽  
Corporate Ownership Structure ◽  
Cash Flow Rights ◽  
And Control ◽  
The Impact ◽  
The Relationship

Purpose This paper aims to examine the relationship between pyramid ownership structure and tax avoidance. Design/methodology/approach This paper is an empirical work using a sample of Canadian listed firms. Findings Relying on several proxies for tax avoidance, the authors find that firms affiliated with pyramidal structures generally engage in more tax avoidance activities than non-affiliated firms; firms affiliated with more complex pyramids engage in more tax avoidance practices and firms located at the lower tiers of the pyramids avoid more taxes; and some pyramid-affiliated firms with larger deviation between controlling shareholders’ cash flow rights and control rights engage in more tax avoidance practices. Social implications A broader understanding of the relationship between pyramidal structure and tax avoidance can be pursued by including firms in other countries, where the pyramid groups (pyramid structure) are prevalent, but institutional environments differ from that of Canada. Originality/value This study highlights the importance of pyramid ownership in shaping tax avoidance activities among Canadian-listed firms. Canada provides an ideal setting for studying the impact of ownership structure, as it contains a diverse corporate ownership structure ranging from widely held freestanding firms to pyramidal business groups.

Tax Avoidance and Asymmetric Cost Behavior

2018 ◽  
Vol 35 (4) ◽  
pp. 723-747 ◽  
Author(s):  
Shawn Xu ◽  
Kenneth Zheng
Keyword(s):  
Negative Relationship ◽  
Tax Avoidance ◽  
Adjustment Costs ◽  
Economic Benefits ◽  
Business Strategies ◽  
Cost Behavior ◽  
Asymmetric Cost ◽  
Cash Savings ◽  
The Relationship ◽  
Asymmetric Cost Behavior

This study examines the relationship between tax avoidance and asymmetric cost behavior. This relationship arises due to direct economic benefits of cash savings from tax avoidance. On one hand, cash savings from tax avoidance may prompt managers to retain excess resources when activity goes down. On the other hand, tax avoidance may alleviate managers’ concerns about adjustment costs due to cost reductions in sales downturns. Using a large sample spanning the 1993-2013 period, we document a significantly negative relationship between tax avoidance, proxied by cash effective tax rate, and asymmetric cost behavior. The result suggests that asymmetric cost behavior is less pronounced when tax avoidance is higher. We further find that this relationship varies with firms’ business strategies, cash flow volatility, and tax fees paid to the auditor. This study advances the understanding of accounting researchers on the relationship between tax avoidance and managers’ resource adjustment decisions.

scholarly journals Designation as the Most Admired Firms to the Sustainable Management of Taxes: Evidence from South Korea

2021 ◽  
Vol 13 (14) ◽  
pp. 7994
Author(s):  
Jaehong Lee ◽  
Suyon Kim ◽  
Eunsoo Kim
Keyword(s):  
Information Asymmetry ◽  
Firm Value ◽  
Sustainable Management ◽  
Corporate Sustainability ◽  
Tax Avoidance ◽  
Information Environment ◽  
Tax Management ◽  
The Relationship ◽  
Positive Effect ◽  
High Information

This study examines whether the designation as the most admired firms affects firms’ tax management behavior. Based on 6880 Korean firms from 2014 to 2018, we regressed to analyze the relationship between the designation as the most admired firms and tax avoidance. Designation as the most admired firm is considered to result in a high reputation, and reputation is one of the intangible assets when assessing the firm value. We found that the firms designated as the most admired firms are reluctant to avoid taxes. Reputable firms are expected to be consistent with their fame. Therefore, those firms are less engaged in unethical or immoral tax avoidance. We also found a positive effect of the index for environmental, social, and governance on the relationship between the designation as the most admired firms and tax avoidance. Environmental, social, and governance activities are the managements’ choice and are a part of corporate activities, whereas firms’ reputations result from enterprise-wide activities. The findings suggest that the designation as the most admired firms with regard to environmental, social, and governance activities is considered highly reputable and results in deciding to improve corporate sustainability in tax management. The relationship between the designation as the most admired firms and tax avoidance is strengthened in an information environment where the firms are Chaebol-affiliated and in high information asymmetry.

scholarly journals Does ownership structure effect IPO underpricing: Evidence from Thai IPOs

2006 ◽  
Vol 3 (2) ◽  
pp. 106-115 ◽  
Author(s):  
Sunder Venkatesh ◽  
Suman Neupane
Keyword(s):  
Regression Model ◽  
Information Asymmetry ◽  
Ownership Structure ◽  
Financial Crises ◽  
Negative Relationship ◽  
Rank Correlation ◽  
Ownership Concentration ◽  
Ipo Underpricing ◽  
Signaling Hypothesis ◽  
The Relationship

The study utilizes a unique set of IPOs data in Thailand post Asian Financial crises to identify the relationship between initial market adjusted underpricing and the ownership concentration. We find that a weak but a negative relationship exists between the two and therefore to certain extent refuting the signaling hypothesis of high ownership and high underpricing. We employ a rank correlation to identify the association between the two variables. A regression model using the widely used proxies of information asymmetry model fails to up hold the information asymmetry model in the context of Thai IPOs.

scholarly journals Corporate Social Responsibility And Tax Avoidance: Evidence From Korean Firms

2017 ◽  
Vol 33 (6) ◽  
pp. 1059-1068 ◽  
Author(s):  
SungJong Park
Keyword(s):  
Economic Development ◽  
Corporate Social Responsibility ◽  
Social Services ◽  
Stock Exchange ◽  
Negative Relationship ◽  
Tax Avoidance ◽  
Least Square ◽  
Socially Responsible ◽  
Corporate Social ◽  
The Relationship

This study examines the relationship between corporate socially responsible (CSR) activities and tax avoidance using residual book-tax differences (BTD), year residual BTD and total BTD. Using a sample of 1,148 publicly listed Korean firms on Korean Stock Exchange (KSE) covering periods between 2004 and 2009 it finds that the firms with higher CSR activities are less likely to avoid taxes regardless which proxy of tax avoidance is used. This finding is confirmed with two stage least square (2SLS) method after accounting for endogeneity of CSR. It also tests how seven different CSR activities affect tax avoidance, and finds that social services, satisfaction of employees and contributions to economic development are negatively related to tax avoidance. Overall, the empirical results of this paper support the previous studies arguing the negative relationship between tax avoidance and CSR.

scholarly journals TAX AVOIDANCE, RELATED PARTY TRANSACTIONS, CORPORATE GOVERNANCE AND THE CORPORATE CASH DIVIDEND POLICY

2017 ◽  
Vol 32 (3) ◽  
pp. 190
Author(s):  
Dewi Kartika Sari ◽  
Sidharta Utama ◽  
Hilda Rossieta
Keyword(s):  
Corporate Governance ◽  
Dividend Policy ◽  
Negative Relationship ◽  
Tax Avoidance ◽  
Payout Policy ◽  
Cash Dividend ◽  
Dividend Payout ◽  
Related Party Transactions ◽  
Dividend Payments ◽  
The Relationship

This study aims to investigate the relationship between tax avoidance, related party transactions and the corporate dividend policy. Furthermore, this study will also investigate the moderating effects of the implementation of Corporate Governance (CG) on the relationship between tax avoidance, Related Party Transactions (RPT) and corporate dividend policies. Our sample covers companies listed on the Indonesian Stock Exchange during 2011-2014. The results provide moderate support for the proposed hypotheses. First, the greater tax avoidance that a company makes will increase the size of the firm's RPT. Second, the higher that the company's RPT is, this will lower the company's cash dividend payout rate. Third, the greater the tax avoidance is, the lower the company's cash dividend payout rate will be, which is done through a related party transaction.Fourth, the impact of the implementation of strong CG will weaken the positive relationship between corporate tax avoidance and the company’s RPT size, strengthen the negative relationship between the RPT’s size and the cash dividend payout policy of the firm, and strengthen the negative relationship between the company’s tax avoidance and the company's cash dividend payout policy which is mediated by the company’s RPT. This study makes three contributions. First, this study shows an indirect relationship between tax avoidance and cash dividend payments, mediated by RPT. Second, this study tries to examine the effect of CG’s moderation on the relationship between tax avoidance and RPT, as well as the effect of CG’s moderation on the relationship between tax avoidance and cash dividend payments, mediated by RPT. Third, this study developed RPT measurements by looking at the RPT’s components more specifically (looking at components of transactions outside of the main business of the company - the "others" component).

scholarly journals The Influence of Political Connection on Tax Avoidance

2020 ◽  
Vol 22 (2) ◽  
pp. 82-90
Author(s):  
Zaga Kresna Pratama Putra ◽  
Novrys Suhardianto
Keyword(s):  
Negative Relationship ◽  
Tax Avoidance ◽  
Rent Seeking ◽  
Supporting Evidence ◽  
Political Connection ◽  
Upper Echelon ◽  
Public Companies ◽  
Upper Echelon Theory ◽  
Political Experience ◽  
The Relationship

The upper echelon theory and rent-seeking theory propose conflicting arguments related to the relationship between a firm’s political connection and tax avoidance. This research aims to examine the relationship between a firm’s political connection and tax avoidance. The 1,079 samples used in this research are public companies with positive income in the 2014-2018 period. By using regression analysis, this research finds that political connection has a negative relationship with tax avoidance, implying that political connection increases tax payment. This research contributes to providing supporting evidence for upper echelon theory by finding that management’s political experience or the intention to maintain a positive image of politically connected management improves tax obedience

scholarly journals Analysis of Tax Amnesty Disclosures, Tax Avoidance, and Firm Value

2019 ◽  
Vol 1 (1) ◽  
pp. 21
Author(s):  
Arie Pratama
Keyword(s):  
Linear Regression ◽  
Multiple Linear Regression ◽  
Firm Value ◽  
Negative Relationship ◽  
Tax Avoidance ◽  
Accounting Standards ◽  
Financial Accounting ◽  
Tax Amnesty ◽  
The Relationship ◽  
Avoidance Level

This research tried to investigate the relationship between tax amnesty disclosures, as mandated by Indonesia’s Statement of Financial Accounting Standards (SFAS) No. 70, the level of tax avoidance, and the firm value. This research used 34 samples of public listed companies that participate in 2016 tax amnesty program. Researcher used spearman-rho correlation coefficient and multiple linear regression to analyze the data. This research showed two results. First, there is a moderate negative relationship between tax amnesty disclosure level and tax avoidance level, indicate that necessity for tax amnesty disclosure will be reduced if the company had the lower level of tax avoidance. Second, this research also showed that tax avoidance level and tax amnesty disclosure level had the negative significant effect toward firm value. It is implied that tax amnesty and tax avoidance were two negative actions that reduce the investor trust’s in the company.

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