How Does Tax Aggressiveness Affect Shareholder Wealth? An Examination Using a Regulatory Transition

We examine the relation between tax aggressiveness and firm value. Using a tax enforcement change in Taiwan that limits firms’ abilities to pursue aggressive tax strategies, we document that the relation between tax aggressiveness and firm value becomes more negative after the regulatory change. Further analyses reveal that the negative change is more pronounced for firms that are more likely to be targeted by the stricter tax enforcement. In addition, we do not find strong evidence on the impact of corporate governance in moderating the main relation. Our results seem to be consistent with the argument that potential increases in regulatory costs may outweigh the benefit of the stricter tax enforcement in constraining insiders’ income diversion, intensifying the conflict between aggressive tax positions and shareholder wealth in our research setting.

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Empirical Analysis of Joint Impact of Enterprise Risk Management and Corporate Governance on Firm Value

International Review of Advances in Business Management and Law ◽

10.30585/irabml.v1i1.66 ◽

2018 ◽

Vol 1 (1) ◽

pp. 34-50 ◽

Cited By ~ 1

Author(s):

Ananth Rao

Keyword(s):

Risk Management ◽

Corporate Governance ◽

Firm Value ◽

Positive Impact ◽

Gulf Cooperation Council ◽

Shareholder Wealth ◽

Enterprise Risk Management ◽

System Modelling ◽

Enterprise Risk ◽

The Impact

This paper analyzes simultaneity and endogeneity of ERM and Corporate Governance. It assesses quantitative relationship between Corporate Governance, ERM and value of the firm. The research results provide quantitative justifications for the boards to make investments in ERM and Corporate Governance initiatives for improved shareholder wealth. 3SLS-IV system modelling was applied on 2004-11 data of Gulf Cooperation Council financial institutions. Our research confirms the simultaneity and endogeneity of Corporate Governance, ERM and Firm Value determinants. Firm value is jointly and positively impacted by ERM & Corporate Governance initiatives although the impact was less significant. Unexpectedly, ERM initiative was significantly and negatively impacted by determinants such as intangibility, and profitability. Firm size was the only determinant that showed significant and positive impact on firm value. Relative to UAE the corporate governance mechanism was active in Bahrain, Saudi Arabia, Kuwait and Oman firms. Further, the existence of audit committees in the GCC firm’s boards and ERM adoption significantly positively impacted the corporate governance by 3.42% and 1.7239% respectively. Keywords: Corporate Governance, Enterprise Risk Management, Firm Value, Simultaneity, Endogeneity, Gulf Cooperation Council (GCC) economies. JEL codes: C15, C21, C51, D57, F30, G21, G32, G34, K22, L21, M31, M41, N25, O16

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Impact of corporate tax aggressiveness on firm value: evidence from India

Managerial Finance ◽

10.1108/mf-01-2021-0033 ◽

2021 ◽

Vol ahead-of-print (ahead-of-print) ◽

Author(s):

Taruntej Singh Arora ◽

Suveera Gill

Keyword(s):

Corporate Governance ◽

Emerging Economies ◽

Firm Value ◽

Fixed Effects ◽

Negative Relationship ◽

Moderating Effect ◽

Corporate Tax ◽

Content Type ◽

Tax Aggressiveness ◽

The Impact

PurposeThere is mixed evidence in the extant literature on the firm value implications of corporate tax aggressiveness in the developed economies. There are, however, limited studies that discuss this relationship in the case of emerging economies. The present study aims to bridge this research gap by exploring the relationship between corporate tax aggressiveness and firm value in context of the Indian economy.Design/methodology/approachThe sample comprises 547 S&P BSE 500 (Standard and Poor's Bombay Stock Exchange 500) Index companies for Financial Year (FY) 2009–10 through FY 2018–19. A fixed-effects panel model has been used to discern the impact of corporate tax aggressiveness on firm value with and without the moderating effect of a proxy for corporate governance strength.FindingsThe results highlight a significant negative relationship between corporate tax aggressiveness and firm value in India, whilst the analysis on the moderating effect of corporate governance strength on this relationship revealed a mix of significant and insignificant results. These results were robust to an alternate specification of the corporate governance strength proxy, the system GMM estimation employed to deal with endogeneity and a change in the Corporate Social Responsibility (CSR) regulation brought into effect by the Companies Act, 2013.Originality/valueThe study reveals a firm value discount associated with corporate tax aggressiveness in India which is likely due to its ability to increase opportunities for wealth expropriation by managers. This can further be attributed to the ineffective corporate governance mechanisms that make agency problems more severe in the case of emerging economies like India.

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A Study of the Relationship between Corporate Governance and Non-business Real Estate

Korean Journal of Financial Studies ◽

10.26845/kjfs.2021.06.50.3.279 ◽

2021 ◽

Vol 50 (3) ◽

pp. 279-313

Author(s):

Changu Jeon ◽

Hyangmi Choi

Keyword(s):

Corporate Governance ◽

Real Estate ◽

Firm Value ◽

Positive Relationship ◽

Negative Relationship ◽

Shareholder Wealth ◽

Private Benefits ◽

Controlling Shareholders ◽

The Impact ◽

The Relationship

Corporate non-business real estate can be used for the private benefits of controlling shareholders, but is also likely to enhance shareholder wealth. This study explores the impact of corporate governance to address this contradiction, particularly the ownership-control disparity on non-business real estate. We further examine the moderating effect of foreign blockholders on the relationship, then conduct additional analyses on the relationship between non-business real estate and firm value. The results are as follows. First, the disparity has a consistently positive relationship with non-business real estate, which implies that corporate non-business real estate can be utilized for expropriation for the benefit of controlling shareholders. Second, the relationship between the disparity and non-business real estate is mitigated by foreign blockholders. Third, we find that non-business real estate has a negative relationship with firm value. This result implicates the inefficiency of non-business real estate and the possibility of agency problem. Forth, investment in non-business real estate is likely to decrease firm value, compared with investment in core business. This study revisits and extends corporate governance research in terms of non-business real estate by identifying the presence of agency problems and monitoring effects of outside blockholders.

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Tax Aggressiveness, Tunneling and Firm Value: Interactive Effect of Corporate Governance in Business Groups

Journal of Applied Economics and Business Studies ◽

10.34260/jaebs.516 ◽

2021 ◽

Vol 5 (1) ◽

pp. 109-130

Author(s):

Hamid Ullah ◽

Hamid Ali Shah ◽

Sajjad Ahmad Khan

Keyword(s):

Corporate Governance ◽

Firm Value ◽

Audit Quality ◽

Interactive Effect ◽

Business Groups ◽

Negative Relationship ◽

Least Square ◽

External Audit ◽

Tax Aggressiveness ◽

The Impact

This study extends the literature on tax aggressiveness (TA) from agency perspectives in the rarely discussed case of group firms. More specifically, the study investigates the relationship between firms TA, tunnelling and value of firm. Moreover, the study also investigates the impact of the moderating role of corporate governance (CG) in counterfeiting the conflicts of interests in group firms. For this purpose, sample data of 160 non-financial Pakistani firms belonging to groups for the period from 2009 to 2018 is analyzed through two Stages Least Square Regression (2SLS) models. The findings reveal that tunneling, group ownership and managerial ownership show direct association with TA. While CG agents, board and audit committee independence and external audit quality exhibits an indirect relationship with TA. Moreover, the tunneling-related TA has a negative effect on the firm value. However, the estimated interaction effects show that CG mitigates this negative relationship between the tunneling-related TA and firm value. Thus, good CG ameliorates the expropriations by the controlling shareholders and TA becomes a value enhancing activity in business groups. Keywords: Tax Aggressiveness, Firm Value, Business Groups, Corporate Governance, External Audit Quality

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Corporate Governance and Firm Value: The Impact of the 2002 Governance Rules

CFA Digest ◽

10.2469/dig.v38.n1.8 ◽

2008 ◽

Vol 38 (1) ◽

pp. 17-19

Author(s):

Michael Kobal

Keyword(s):

Corporate Governance ◽

Firm Value ◽

The Impact

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The Influence of Good Corporate Governance and Capital Structure on Firm Value: The Mediation Role of Financial Performance

Media Ekonomi dan Manajemen ◽

10.24856/mem.v35i2.1554 ◽

2020 ◽

Vol 35 (2) ◽

pp. 230

Author(s):

Ridwan Nurazi ◽

Intan Zoraya ◽

Akram Harmoni Wiardi

Keyword(s):

Corporate Governance ◽

Capital Structure ◽

Financial Performance ◽

Firm Value ◽

Stock Exchange ◽

Linear Regression Analysis ◽

Multiple Linear Regression Analysis ◽

Company Value ◽

Good Corporate Governance ◽

The Impact

<pre>The objective of this study is empirically identify the impacts of Good Corporate Governance and capital structure on firm value with financial performance as intervening variable. We operate quantitative approach within the scope of manufacturing company of metal, chemical, and plastic packaging sector which listed in Indonesia Stock Exchange during the 2017-2018 periods as the population. Samples are chosen by purposive sampling method inwhich the company must report the financial statement in a row, obtained 79 observations. The data analysis technique used is financial ratio analysis to determine the condition of the business financial ratios of the variables studied. Data were analyzed using multiple linear regression analysis. The result shows that corporate governance and capital structure influence the firm value, moreover the use of institutional ownership ratio and capital structure will increase the value of the firm. The result also shows that the impact of Corporate governance and capital structure on the company value are mediated by financial performance. It means that the value of the firm can increase if the company able became an effective monitoring tool.</pre>

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Does Corporate Governance Influence the Firm Value in Bangladesh? A Panel Data Analysis

E+M Ekonomie a Management ◽

10.15240/tul/001/2021-2-006 ◽

2021 ◽

Vol 24 (2) ◽

pp. 84-100

Author(s):

Mohammed Nazim Uddin ◽

Mosharrof Hosen ◽

Shahnur Azad Chowdhury ◽

Mustafa Manir Chowdhury ◽

Manjurul Alam Mazumder

Keyword(s):

Corporate Governance ◽

Data Analysis ◽

Panel Data ◽

Firm Value ◽

Panel Data Analysis ◽

Small Scale ◽

Board Structure ◽

Corporate Governance Code ◽

Regulatory Bodies ◽

The Impact

Corporate governance has been widely debated for over a decade with the collapse of the financial and capital market under the prejudicial roles of regulatory bodies. Therefore, the study examined the impact of corporate governance on firm value in Bangladesh. A total of 63 DSE-listed companies from 2005 to 2019 consisting of 8,505 observations on an average of 15 years were chosen. The subsequent tests for the given data were conducted to identify the appropriate panel data analysis method for adjusted diagnostic problems. In the specific panel data, the Panel Corrected Standard Error (PCSE) was utilised following the application of the random effects method to control econometric limitations. It was revealed that corporate governance lowered firm value when the board structure was familially and politically affiliated and led by CEO-duality. Moreover, the inclusion of dynamic professionals and independent members in the board structure increased the firm value. The use of the corporate governance code was proven to be highly challenging due to the participation of political and family leaders in corporate firms. Additionally, proper law enforcement was required to ensure transparency and accountability, thus reflecting firm value. As previous studies on corporate governance were conducted on a small scale and partial to the context of developing countries, this paper contributes a novel value in identifying and resolving the corporate governance crisis by reforming the board structure with diverse and professional directors. The regulatory bodies require improvement by including autonomous professional and independent members to exercise the corporate governance code.

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The roles of cost of capital, corporate governance, and corporate social responsibility in improving firm value: evidence from Indonesia

Investment Management and Financial Innovations ◽

10.21511/imfi.16(4).2019.03 ◽

2019 ◽

Vol 16 (4) ◽

pp. 28-36 ◽

Cited By ~ 1

Author(s):

Kartika Hendra Titisari ◽

M. Moeljadi ◽

Kusuma Ratnawati ◽

Nur Khusniyah Indrawati

Keyword(s):

Corporate Governance ◽

Corporate Social Responsibility ◽

Social Responsibility ◽

Firm Value ◽

Cost Of Capital ◽

Corporate Sustainability ◽

Corporate Image ◽

Negative Effect ◽

Corporate Social ◽

The Impact

Corporate governance (CG) and corporate social responsibility (CSR) are important subjects for corporate sustainability that affect firm value (FV). At the same time research results in several countries provide diverse empirical evidence. This study analyzes the impact of corporate governance (CG) and corporate social responsibility (CSR) on firm value (FV) through the cost of capital (CoC) in public companies of Indonesia. The research sample includes 27 companies that publish sustainability reports and corporate governance reports, with an observation period from 2010 till 2016. This study presents the analysis of three firm value proxies (Tobin’s q (TQ), Price Earnings Ratio (PER), and Price to Book Value (PBV)). Results of hypotheses testing using Partial Least Squares (PLS) show that CG and CSR have both direct and indirect effects on FV. These findings are consistent for all three firm value assessments. According to direct testing, CG has a negative effect on FV, while CSR has a positive effect. The CoC acts as a mediating variable in this relationship. The CG and CSR have a negative effect on CoC, while CoC has a negative effect on FV. The findings show that CG and CSR can improve the company performance and corporate image internally and externally, thereby increasing the investors` confidence, and companies have the opportunity to obtain inexpensive funding sources that can reduce CoC. A decrease in CoC can increase profitability and have an impact on FV increasing.

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Corporate Governance and Economic Performance: The Limit of Short Termism

Financial Markets Institutions and Risks ◽

10.21272/fmir.3(4).49-61.2019 ◽

2019 ◽

Vol 3 (4) ◽

pp. 49-61

Author(s):

F. D. Tommaso ◽

A. Gulinelli

Keyword(s):

Corporate Governance ◽

Board Of Directors ◽

Economic Performance ◽

Performance Indicators ◽

Financial Management ◽

Firm Value ◽

Key Performance Indicators ◽

Common Interest ◽

The Board Of Directors ◽

The Impact

This article includes exploring arguments and counterarguments in the context of conducting a scientific discussion on the impact of corporate governance on a company’s financial and economic performance. The main purpose of this paper is to determine the nature of the impact of corporate governance policy on the activities of economic entities. The systematization of literary sources and approaches to problem solving has shown that there are two opposing points of view: firm value, efficiency), on the other hand, a number of scientists are convinced that there is a positive influence of the functioning of the corporate governance system on the valuation of listed companies. The work emphasizes the decisive role of the board of directors of the company in the development and adoption of the strategic direction of development of the organization. The author points out in the study the need for coordinated interaction of the board of directors with the financial management of the company and the business owners in order to increase the efficiency and profitability of the business entity. It is stated that the key economic tools for achieving and implementing the strategic plans of the company can be the key performance indicators and accordingly developed measures to achieve such success. As a result, it is justified that corporate governance should not be a set of rules and mechanisms aimed at managing and controlling companies, but rather as a process by which companies become sensitive to stakeholder rights. The spread of corporate culture, according to the author of a work aimed at protecting the common interest, is facilitated by the existence of good rules and effective authorities that control their observance. Keywords: corporate governance, financial and economic activity, board of directors, key performance indicators.

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