Corporate effective tax rates: An exploratory study of South African listed firms

2019 ◽  
Vol 33 (2) ◽  
pp. 99-113
Author(s):  
Cecileen Greeff
Keyword(s):  
South African ◽  
Exploratory Study ◽  
Tax Rates ◽  
Effective Tax Rates ◽  
Listed Firms

scholarly journals The effect of specific share repurchases on South African payout ratios: An exploratory study

2012 ◽  
Vol 2 (1) ◽  
pp. 41-50
Author(s):  
Annalien de Vries ◽  
Pierre D. Erasmus ◽  
Willie D. Hamman ◽  
Nicolene Wesson
Keyword(s):  
South African ◽  
Exploratory Study ◽  
Share Repurchases ◽  
Dividend Payout ◽  
Listed Firms

This article reports on an investigation of whether the introduction of share repurchases in 1999 resulted in differences in the dividend payout ratios of South African listed firms. Dividend payout ratios for the two ten-year sub-periods preceding and following the introduction of share repurchases respectively are compared for a sample of repurchasing firms and all listed firms. The results indicate that dividend payout ratios were statistically significantly lower during the ten-year sub-period following the introduction of share repurchases than before. The payout ratios for those firms involved in specific share repurchases, however, were found not to differ significantly from payout ratios in general. Furthermore, the payout ratios of repurchasing firms did not change significantly during the two sub-periods.

scholarly journals Reported Profits And Effective Tax Rate Following Accounting Standards Changes Analysis Of Consolidated Financial Statements And Separate Financial Statements

2017 ◽  
Vol 33 (6) ◽  
pp. 1171-1186
Author(s):  
Jeong Ho Kim ◽  
Chae Chang Im
Keyword(s):  
Accounting Standards ◽  
Financial Statements ◽  
Policy Implications ◽  
Tax Rates ◽  
Net Income ◽  
Effective Tax Rate ◽  
Consolidated Financial Statements ◽  
Effective Tax Rates ◽  
Tax Rate ◽  
Listed Firms

This study empirically examines how the adoption of IFRS affected the reported profits and effective tax rates of firms by analyzing consolidated financial statements and separate financial statements. Firms that adopted IFRS in 2011 were required to disclose consolidated financial statements and separate financial statements in both K-IFRS and K-GAAP for this period. We conjecture that there will be a difference in the reported profits and effective tax rates between the financial statements that adopt the two different accounting standards. This study will provide policy implications with regards to the recent IFRS adoption and the use of accounting standards. The findings of this study are as follows. First, we find that the effective tax rate and corporate tax expenses decreased after the adoption of K-IFRS from K-GAAP. Earnings Before Tax (EBT) and net income also decreased when reported in K-IFRS. When we divide the total sample into the listed firms and KOSDAQ firms, we found a significant difference between the accounting standards in the total sample and listed firms, but did not see such a difference in KOSDAQ firms. In addition, results from the analysis of separate financial statements were analogous to those from consolidated financial statements. Additional analyses examined the effect of the early adoption of IFRS, but a significant influence due to early adoption was not found in consolidated financial statements from both parametric and non-parametric tests. However, the effective tax rate did decrease in the separate financial statements of firms that adopted K-IFRS earlier. The implementation of K-IFRS (changes in accounting standards) has made the managerial performance of firms accounted for in the Equity Method to be reflected in EBT and net income. This entailed an increase (or decrease) in the Equity Method profit, which in turn increased reported profits and decreased effective tax rates. In other words, the total increase of reported profits in consolidated financial statements can be attributed to subsidiary companies. However, the adoption of IFRS also reduced the tax burden, which is considered to be the motivation for firms to adopt IFRS in advance. This article attempts to provide policy implications with regards to the adoption of new accounting standards and its influence on the corporate tax expenses and effective tax rates in listed firms and KOSDAQ firms.  

A Study of Perceived Ethicality of Low Corporate Effective Tax Rates

2017 ◽  
Vol 32 (1) ◽  
pp. 87-104 ◽  
Author(s):  
F. Todd DeZoort ◽  
Troy J. Pollard ◽  
Edward J. Schnee
Keyword(s):  
Mediation Analysis ◽  
General Public ◽  
Tax Avoidance ◽  
Tax Rates ◽  
Perceived Fairness ◽  
Effective Tax Rate ◽  
Effective Tax Rates ◽  
Tax Rate ◽  
Policy Practice ◽  
Participant Group

SYNOPSIS U.S. corporations have the ability to avoid paying domestic taxes to achieve an effective tax rate that is much lower than the statutory federal tax rate. This study evaluates the extent that individuals differ in their attitudes about the ethicality of corporations avoiding domestic taxes to achieve low effective tax rates. We also examine the extent to which the specific tax avoidance method used by corporations to access a low effective tax rate affects perceived ethicality. Eighty-two members of the general public and 112 accountants participated in an experiment with two participant groups and three tax avoidance methods manipulated randomly between subjects. The results indicate a significant interaction between participant group and tax avoidance method, with the general public considering shifting profits out of the country to achieve a low effective tax rate to be highly unethical, while the accountants find tax avoidance from carrying forward prior operating losses to be highly ethical. Further, mediation analysis indicates that perceived fairness and legality mediate the effects of participant type on perceived ethicality. Mediation analysis also reveals that sense of fairness and legality mediate the link between tax avoidance method and perceived ethicality. We conclude by considering the study's policy, practice, and research implications.

An Exploratory Study of the Valuation Properties of Cross-Listed Firms' IAS and U.S. GAAP Earnings and Book Values

2002 ◽  
Vol 77 (1) ◽  
pp. 107-126 ◽  
Author(s):  
Hollis Ashbaugh ◽  
Per Olsson
Keyword(s):  
Exploratory Study ◽  
Accounting Standards ◽  
Equity Market ◽  
Residual Income ◽  
International Accounting Standards ◽  
Generally Accepted Accounting Principles ◽  
Listed Firms ◽  
Valuation Model ◽  
Accounting Principles ◽  
Book Values

Despite the increasing integration of global capital markets, there is little evidence on the valuation properties of cross-listed, non-U.S. firms' accounting variables. We use the relative performance of the earnings capitalization, the book value, and the residual income valuation models to explore the valuation properties of International Accounting Standards and U.S. Generally Accepted Accounting Principles earnings and book values reported by non-U.S., cross-listed firms trading in a common equity market. Using non-U.S./non-U.K. firms whose shares trade on the International Stock Exchange Automated Quotation system in London, we find that the earnings capitalization model is the dominant accounting-based valuation model when crosslisted firms report under International Accounting Standards. In contrast, we find that when cross-listed firms report under U.S. Generally Accepted Accounting Principles, the residual income model is the dominant accountingbased valuation model. Our exploratory study provides insights into the valuation implications of allowing a dual reporting system for foreign registrants trading in a common equity market.

An Examination of Reputational Costs and Tax Avoidance: Evidence from Firms with Valuable Consumer Brands

2017 ◽  
Vol 39 (1) ◽  
pp. 67-93 ◽  
Author(s):  
Chelsea Rae Austin ◽  
Ryan J. Wilson
Keyword(s):  
Tax Avoidance ◽  
Tax Rates ◽  
Effective Tax Rates ◽  
Reputational Costs

ABSTRACT We expect firms with the greatest exposure to reputational damage among consumers will engage in lower levels of tax avoidance to minimize unwanted scrutiny that could impair the firms' reputation. We identify a set of firms with valuable consumer reputation using Harris Interactive's EquiTrend survey, which surveys consumers about their perceptions of valuable and prominent brands. We find evidence in support of our hypothesis that firms with valuable brands will engage in less tax avoidance. Specifically, we find a positive and significant association between our measure of reputation and both the GAAP and cash effective tax rates (measured over one and three years). We find mixed evidence on whether there is a negative and significant association between reputation and the probability the firm is engaging in tax sheltering.

A Model of Multinational Income Shifting and an Application to Tax Planning with E-Commerce

2014 ◽  
Vol 36 (2) ◽  
pp. 27-53 ◽  
Author(s):  
Kenneth J. Klassen ◽  
Stacie K. Laplante ◽  
Carla Carnaghan
Keyword(s):  
Tax Planning ◽  
Investment Model ◽  
Income Shifting ◽  
Tax Rates ◽  
Foreign Investments ◽  
Effective Tax Rates ◽  
Tax Rate ◽  
Foreign Earnings ◽  
Joint Consideration ◽  
The U.S

ABSTRACT: This manuscript develops an investment model that incorporates the joint consideration of income shifting by multinational parents to or from a foreign subsidiary and the decision to repatriate or reinvest foreign earnings. The model demonstrates that, while there is always an incentive to shift income into the U.S. from high-foreign-tax-rate subsidiaries, income shifting out of the U.S. to low-tax-rate countries occurs only under certain conditions. The model explicitly shows how the firms' required rate of return for foreign investments affects both repatriation and income shifting decisions. We show how the model can be used to refine extant research. We then apply it to a novel setting—using e-commerce for tax planning. We find firms in manufacturing industries with high levels of e-commerce have economically significant lower cash effective tax rates. This effect is magnified for firms that are less likely to have taxable repatriations. JEL Classifications: G38, H25, H32, M41.

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