Tax compliance of financial services firms: a developing economy perspective

2019 ◽  
Vol 22 (1) ◽  
pp. 14-31 ◽  
Author(s):  
Doreen Musimenta ◽  
Sylvia Naigaga ◽  
Juma Bananuka ◽  
Mariam Ssemakula Najjuma
Keyword(s):  
Developing Countries ◽  
Financial Services ◽  
Tax Compliance ◽  
Firm Level ◽  
Cross Sectional ◽  
Compliance Costs ◽  
Tax Morale ◽  
Content Type ◽  
Study Results ◽  
Financial Services Firms

Purpose The purpose of this study is to examine the contribution of tax morale, compliance costs and tax compliance of financial services firms in Uganda. Design/methodology/approach This study is cross-sectional and correlational and adopts firm-level data collected using a questionnaire survey of 210 financial services firms in Uganda from which usable questionnaires were received from 152 financial services firms. Findings Tax morale and compliance costs contribute up to 20.6 per cent of the variance in tax compliance of the financial services firms. Tax morale and tax compliance are positively and significantly associated. Results further indicate that compliance costs and tax compliance are positively and significantly associated. National pride and trust in government and its legal systems as dimensions of tax morale independently are significantly associated with tax compliance. Results also indicate that administration costs and specialist costs as dimensions of compliance costs individually are significantly associated with tax compliance. Research limitations/implications This study results should be generalized with caution, as they are limited to the financial services firms in Uganda. Originality/value Whereas there has been a number of studies on tax compliance in both developed and developing countries, this is the first study on the African scene to examine the contribution of tax morale and compliance costs on tax compliance of financial services firms in a single suite. It is unbelievable that the financial services firms, especially commercial banks which are highly regulated by the central bank in many developing countries, can afford to report tax payables year after year.

Internal audit organisational status, competencies, activities and fraud management in the financial services sector

2017 ◽  
Vol 32 (9) ◽  
pp. 924-944 ◽  
Author(s):  
Frank Kabuye ◽  
Stephen Korutaro Nkundabanyanga ◽  
Julius Opiso ◽  
Zulaika Nakabuye
Keyword(s):  
Financial Services ◽  
Policy Development ◽  
Internal Audit ◽  
Firm Level ◽  
Cross Sectional ◽  
Content Type ◽  
Internal Auditors ◽  
Services Sector ◽  
Financial Services Sector ◽  
Financial Services Firms

Purpose The purpose of this paper is to study the relationship between internal audit organisational status, competencies, activities and fraud management. As a corollary, this paper examines the contribution made by the internal audit organisational status, the internal audit competence and the internal audit activities on fraud management in financial services firms. Design/methodology/approach This study is cross-sectional and correlational, and it uses firm-level data that were collected by means of a questionnaire survey from a sample of 54 financial services firms in Kampala – Uganda. Findings Results suggest that the internal audit organisational status and the internal audit competence are significant predictors of fraud management. Contrary to previous thinking, internal audit activities do not significantly predict fraud management. Therefore, once internal auditors have appropriate status and are competent in an organisation, they are likely to perform activities that enhance fraud management. Research limitations/implications This study focuses on financial services firms in Uganda, and it is possible that these results are only applicable to the financial services sector. More research is therefore needed to further understand the contribution of the internal audit constructs on fraud management in other sectors such as the public sector. Practical implications The results are important for internal audit policy development, for example, in terms of prescribing the competences and reporting lines for the internal auditors to enhance fraud management in the financial services sector. Originality/value As far as the authors are aware, no research has hitherto been undertaken that investigates the individual contribution of internal audit organisation status, competence and its activities as internal audit constructs on fraud management.

Heritage-based value of a corporate brand: antecedents and effects on the firm’s financial value

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Woonsun Paek ◽  
Hyerin Ryu ◽  
Sunkyu Jun
Keyword(s):  
Quantitative Research ◽  
Firm Level ◽  
Cross Sectional ◽  
Corporate Brand ◽  
Content Type ◽  
Study Results ◽  
Corporate Brands ◽  
The Relationship ◽  
Positive Effect ◽  
Practical Implications

Purpose The purpose of this study is to show that a corporate brand with a long history coupled with relevance to the present obtains heritage-based value in society and the second aim is to examine a boundary condition in which the heritage-based value of a corporate brand increases the firm’s financial value. Design/methodology/approach A survey was conducted to investigate when and how a corporate brand obtains its heritage-based value in society and archival analysis was conducted to analyze the relationship between the heritage-based value of a corporate brand and the firm’s financial value. Findings The longevity of a corporate brand increased its heritage-based value, particularly when the brand was perceived to be temporally continuous, through the enhancement of authenticity perception and the heritage-based value had a positive effect on the firm’s financial value for younger firms. Research limitations/implications This study extends the benefits of the heritage association of a corporate brand to the firm level but has a limitation in its cross-sectional method. Practical implications The study results justify monetary costs incurred in the course of developing and cultivating a brand’s heritage association. Originality/value It is believed that this study is the first quantitative research examining the relationship between the heritage-based value of corporate brands and firms’ financial value.

Women in control and tax compliance

2019 ◽  
Vol 34 (6) ◽  
pp. 444-464
Author(s):  
Theresia Woro Damayanti ◽  
Supramono Supramono
Keyword(s):  
Developing Countries ◽  
Tax Compliance ◽  
Geographic Region ◽  
Strategic Decision ◽  
Marginal Effect ◽  
Corporate Tax ◽  
Firm Level ◽  
Effect Analysis ◽  
Content Type ◽  
Top Managers

Purpose The study aims to empirically analyze the effects of the presence of female top managers and owners on corporate tax compliance. Design/methodology/approach Data for analysis were sourced from the World Bank Enterprise Surveys that involved 23,178 private firms in 98 countries. The surveys used a stratified random sampling method by using three criteria, namely, firm size, business sector and geographic region, within each country. Further, data are analyzed using the ordinal logistic regression and supported by the marginal effect analysis. Findings The results show that the presence of female top managers and owners is a significant factor that underlies the firm-level tax compliance difference when firms exhibit relatively lower compliance. Practical implications Although this study shows that the determinants of corporate tax compliance are very complex, there are also crucial roles of top managers and owners' gender. This study advises firms to use the gender equality strategy to generate the best human capital, especially in their top management levels. Besides, this study can be helpful in designing policies that facilitate women to reach top managerial levels or to own businesses as an alternative method to enhance tax compliance for developing countries that fail to generate optimal corporate income tax revenues. Originality/value To the best of the authors’ knowledge, no previous studies examine the effects of the presence of female top managers and business owners on firms’ tax compliance policies. This study contributes to extend the understanding of the important role of women in corporate strategic decision-making, especially in taxation policies in various developing countries.

Initial informality as an obstacle to intellectual capital acquisitions

2019 ◽  
Vol 20 (4) ◽  
pp. 472-487 ◽  
Author(s):  
Rodrigo Costamagna ◽  
Sandra Idrovo Carlier ◽  
Pedro Mendi
Keyword(s):  
Developing Countries ◽  
Latin American ◽  
Informal Sector ◽  
Intellectual Capital ◽  
Fixed Effects ◽  
Technology Licensing ◽  
Formal Sector ◽  
Firm Level ◽  
Cross Sectional ◽  
Content Type

Purpose Most developing countries are characterized by large informal sectors. A substantial proportion of firms in these countries began operations in the informal sector, eventually becoming formal. The purpose of this paper is to study whether, after formalization, firms that began operations in the informal sector are more or less likely to use intellectual capital in the form of disembodied technology licensing than firms that began operations in the formal sector. The moderating roles of being a downstream firm, age and the country’s per capita income are also analyzed. Design/methodology/approach The effect of initial informality on the probability of licensing is estimated using firm-level data from the World Bank’s Enterprise Survey, conducted in several Latin American countries in 2006–2017. Findings Formal firms that began informally are less likely to use licensed technology, suggesting the existence of long-run effects of informality. The effect of initial informality is more negative among downstream firms. Research limitations/implications The analysis uses cross-sectional data. Unobservable firm fixed effects could be controlled for using longitudinal data. Practical implications Initial informality affecting the innovation strategies of firms should be considered when designing policies that incentivize formality. Social implications If, in light of the results of this analysis, policies are designed which foster a better allocation of resources, there will be a tangible impact in the lives of many people in developing countries. Originality/value This is the first paper that analyzes the relationship between initial informality status and technology licensing, a relevant channel for the international diffusion of technology.

scholarly journals Determinants of climate financing and the moderating effect of politics: evidence from Bangladesh

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Seong Mi Bae ◽  
Md. Abdul Kaium Masud ◽  
Md. Harun Ur Rashid ◽  
Jong Dae Kim
Keyword(s):  
Developing Countries ◽  
Positive Impact ◽  
Investment Decision ◽  
Business Management ◽  
Media Influence ◽  
Climate Finance ◽  
Political Connection ◽  
Firm Level ◽  
Cross Sectional ◽  
Content Type

Purpose There was no previous firm-level empirical research to examine cross-sectional differences in climate financing. The purpose of this study is to determine the key elements of the climate investment decision by business management. The study also explores how politics and media influence corporate climate investment decisions. Design/methodology/approach The study incorporates a theoretical lens of institutional, stakeholder and media setting agenda to explain the relationship of climate finance with political connection and media influence along with other institutional and firm-specific variables. The sample of the study is collected from the financial sector firms that financed climate/green projects. In total, 178 firm-year observations are documented during 2014–2018. The unbalanced panel data model uses a fixed effect and a 2SLS regression model to test a set of hypotheses. The study uses several alternate methods to check and verify the reliability of the study. Findings The empirical findings show that climate finance is positively and significantly associated with Islamic Sharīʿah and media visibility, and negatively and significantly related to financial constraints. Moreover, the empirical results document that listing regulation has no significant influence on climate investment. The political connection plays a negative moderating role between media and climate finance. The result indicates that if a former or current politician is on the board, the media’s positive impact on climate financing diminishes. Practical implications The study has significant managerial implications especially to the regulatory bodies, business management and policymakers. The central bank in the developing countries needs to take into consideration the finding of the study promoting climate/environmental/green finance and investment. Islamic Sharīʿah promotes climate finance that would be a prominent indicator for Islamic financial institutions. Social implications Politics can deter positive decisions on climate financing such that it negatively influences the media’s role of a watchdog of the society in developing countries. Climate investment would be an important mechanism to reduce carbon emissions and environmental hazards and to solve many social problems. Originality/value The study provides first-ever firm-level evidence of the determinants of climate finance and investment that has a significant value in the area of climate change and green investment by the financial firms.

Antecedents of tax compliance of small business enterprises: a developing country perspective

2019 ◽  
Vol 61 (1) ◽  
pp. 24-44
Author(s):  
Night Sadress ◽  
Juma Bananuka ◽  
Laura Orobia ◽  
Julius Opiso
Keyword(s):  
Developing Countries ◽  
Small Business ◽  
Developing Country ◽  
Tax Compliance ◽  
Cross Sectional ◽  
Tax System ◽  
Content Type ◽  
Single Study ◽  
Correlational Data ◽  
Business Enterprises

PurposeThe purpose of this study was to investigate the contribution of attitude towards electronic tax system, adoption of electronic tax system and isomorphic forces to tax compliance of small business enterprises (SBEs) in a developing country in a single study.Design/methodology/approachThis study is cross-sectional and correlational. Data were collected through a questionnaire survey of 214 owner-managed SBEs in Uganda through their managers. Data were analysed using Statistical Package for Social Sciences.FindingsAttitude towards electronic tax system, adoption of electronic tax system and isomorphic forces significantly contribute to tax compliance to the extent of 57.4 per cent. Isomorphic forces have a high predictive power of tax compliance as compared with attitude towards electronic tax system. Further, coercive, normative and mimetic isomorphism as constructs of isomorphic forces are significantly associated with tax compliance.Research limitations/implicationsGiven that this study was cross-sectional, monitoring changes in behaviour over time was not possible. The results are useful for policy makers and taxpayers in developing countries. These results can also be generalized to other developing countries especially those in Africa and other continents dominated by developing countries.Originality/valueTo the researchers’ knowledge, this is the first study to examine the contribution of attitude towards electronic tax system, adoption of electronic tax system and isomorphic forces to tax compliance of SBEs in a developing country in a single study on the African scene.

Intellectual capital, isomorphic forces and internet financial reporting

2019 ◽  
Vol 36 (2) ◽  
pp. 110-133 ◽  
Author(s):  
Juma Bananuka
Keyword(s):  
Financial Reporting ◽  
Intellectual Capital ◽  
Financial Services ◽  
Correlation Coefficients ◽  
Service Firms ◽  
Cross Sectional ◽  
Content Type ◽  
Correlational Data ◽  
Financial Services Firms ◽  
Financial Service Firms

Purpose The purpose of this paper is to report on the results of study carried out to examine the contribution of intellectual capital (IC) and isomorphic forces (IF) to internet financial reporting (IFR) among financial services firms in an emerging economy like Uganda. Design/methodology/approach This study is cross sectional and correlational. Data were collected through a questionnaire survey of 40 financial services firms. Data were analyzed through correlation coefficients and linear regression using Statistical Package for Social Sciences. Findings Results suggest that both IC and IF are significant predictors of IFR among financial services firms in Uganda. However, IF significantly contribute to IFR when IC is not present. Originality/value This study provides an initial empirical evidence on the contribution of IC and IF to IFR using evidence from Uganda’s financial service firms.

Information risk, stock returns, and asset pricing: Evidence from China

2017 ◽  
Vol 30 (4) ◽  
pp. 379-394 ◽  
Author(s):  
Raheel Safdar ◽  
Chen Yan
Keyword(s):  
Stock Returns ◽  
Factor Model ◽  
Empirical Literature ◽  
Firm Level ◽  
Cross Sectional ◽  
Market Pricing ◽  
Content Type ◽  
Information Risk ◽  
Accruals Quality ◽  
Three Factor

Purpose This study aims to investigate information risk in relation to stock returns of a firm and whether information risk is priced in China. Design/methodology/approach The authors used accruals quality (AQ) as their measure of information risk and performed Fama-Macbeth regressions to investigate association of AQ with future realized stock returns. Moreover, two-stage cross-sectional regression analysis was performed, both at firm level and at portfolio level, to test if the AQ factor is priced in China in addition to existing factors in the Fama French three-factor model. Findings The authors found poor AQ being associated with higher future realized stock returns. Moreover, they found evidence of market pricing of AQ in addition to existing factors in the Fama French three-factor model. Further, subsample analysis revealed that investors value AQ more in non-state owned enterprises than in state owned enterprises. Research limitations/implications The study sample comprises A-shares only and the generalization of the findings is limited by the peculiar institutional and economic setup in China. Originality/value This study contributes to market-based accounting literature by providing further insight into how and if investors value information risk, and it seeks to fill gap in empirical literature by providing evidence from the Chinese capital market.

Fashion designers' attitude-behaviour inconsistencies towards a sustainable business model: a neutralisation theory perspective

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Asphat Muposhi ◽  
Brighton Nyagadza ◽  
Chengedzai Mafini
Keyword(s):  
South Africa ◽  
Online Survey ◽  
Emerging Market ◽  
Survey Study ◽  
Future Research ◽  
Cross Sectional ◽  
Content Type ◽  
Study Results ◽  
Sustainable Fashion ◽  
Fashion Designers

PurposeFashion designers in South Africa remain ambivalent in embracing sustainable fashion. This study examines the role of neutralisation techniques on attitude towards sustainable fashion. The study was conducted in South Africa, an emerging market known for water scarcity and pollution emanating from the textile industry.Design/methodology/approachA structured questionnaire was used to collect cross-sectional data from a sample of 590 fashion designers using a web-based online survey. Study constructs were drawn from the neutralisation theory and theory of planned behaviour.FindingsStandard multiple regression analysis results identified denial of injury, appeal to higher loyalties and external locus of control as the major rationalisation techniques influencing South African designers' negative attitudes towards sustainable fashion.Research limitations/implicationsResearch was conducted in South Africa where the concept of sustainable fashion is still at developmental stages. The generalisation of the study findings may be enhanced by extending the study to other markets with a fully developed market for sustainable fashion.Practical implicationsThe study results underscore the necessity of reducing social, structural and institutional barriers associated with the adoption of sustainable fashion. This study provides input towards efforts to develop attitude change strategies to stimulate designers to embrace sustainable fashion.Originality/valueThe research study contributes to theory, practice and future research.

scholarly journals Evaluating the individual- and country-level variations in tax morale

2017 ◽  
Vol 44 (5) ◽  
pp. 816-832 ◽  
Author(s):  
Colin C. Williams ◽  
Besnik Krasniqi
Keyword(s):  
Tax Compliance ◽  
State Intervention ◽  
Developed Countries ◽  
Social Actor ◽  
Actor Model ◽  
Tax Morale ◽  
Content Type ◽  
Country Level ◽  
The One ◽  
The Individual

Purpose Recently, a small but burgeoning literature has argued that tax non-compliance cannot be fully explained using the conventional rational economic actor approach which views non-compliance as occurring when the pay-off is greater than the expected cost of being caught and punished. Instead, a social actor approach has emerged which views tax non-compliance as higher when “tax morale”, defined as the intrinsic motivation to pay taxes, is low. To advance this social actor model, the purpose of this paper is to evaluate the individual and national heterogeneity in tax morale, which is crucial if tax compliance is to be improved. Design/methodology/approach To do this, the authors report data from the 2010 Life in Transition Survey on tax morale in 35 Eurasian countries. Findings Logit econometric analysis reveals, on the one hand, that there is higher tax morale among middle-aged, married, homeowners with children, with a university degree and employed, and on the other hand, that there is higher tax morale in more developed countries with stronger legal systems and less corruption, and higher levels of state intervention in the form of both taxation and expenditure. Research limitations/implications Rather than continue with the rational actor approach, this paper reveals that how an emergent social actor approach can help to more fully explain tax non-compliance and results in a different policy approach focused upon changing country-level economic and social conditions associated with low tax morale and thus non-compliance. Practical implications These results display the specific populations with low tax morale which need targeting when seeking to tackle tax non-compliance. Originality/value This paper provides a new way of explaining and tackling tax non-compliance in Eurasian countries.

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