The effects of earnings management and corporate tax avoidance on firm value

2016 ◽  
Vol 9 (2) ◽  
pp. 112 ◽  
Author(s):  
Sally M. Yorke ◽  
Mohammed Amidu ◽  
Cletus Agyemin Boateng
Keyword(s):  
Earnings Management ◽  
Firm Value ◽  
Tax Avoidance ◽  
Corporate Tax

scholarly journals DO FIRMS FACING INCREASES IN FINANCIAL CONSTRAINTS TEND TO GENERATE CASH THROUGH TAX AVOIDANCE? EMPIRICAL EVIDENCE FROM INDONESIA PUBLICLY LISTED FIRMS

Scientax ◽  
2021 ◽  
Vol 2 (2) ◽  
pp. 232-247
Author(s):  
John Erhan Prasetyo Hermawan ◽  
Riko Riandoko
Keyword(s):  
Firm Value ◽  
Financial Constraints ◽  
Global Financial Crisis ◽  
Tax Avoidance ◽  
Corporate Image ◽  
Avoidance Behaviour ◽  
Regression Result ◽  
Corporate Tax ◽  
Listed Firms ◽  
The Impact

This study examines the effect of increases in financial constraints measured at both firm-specific and macroeconomic level on corporate tax avoidance behaviour. Based on a hand-collected sample of 60 publicly listed firms on Indonesia Stock Exchange (IDX) from the year 2009 to 2016, our regression result shows that firms facing increased firm-specific constraints exhibit lower cash effective tax rates ranging from 0.55 to 9.57 percent which equate to between 0.60 and 10.29 percent of operating cash flows, whereas at macroeconomic constraints do not. The firm-specific constraints result is consistent with our hypothesis and Edwards, et al. (2016), whereas macroeconomic constraints result is inconsistent. Nevertheless, its inconsistency can be caused by several factors, i.e.: (1) the change of corporate tax rate from 28 to 25 percent as fiscal policy after the impact of Global Financial Crisis 2008. It could reduce tax avoidance behaviour; (2) Indonesian Go Public Information Centre stated that the purpose of the firms’ Initial Public Offering (IPO) is not only to finance the firms’ operation due to increases in financial constraints, but also to increase firm value, improve corporate image, grow employee loyalty, maintain business continuity and get tax incentives; (3) the equity financing in Indonesia is more related to equity participation activities conducted among shareholders that’s not listed on the stock or bond markets, e.g. private placement, joint venture, mergers and acquisitions.

scholarly journals Pengaruh Manjemen Laba dan Tax Avoidance Terhadap Nilai Perusahaan (Studi Empiris pada Perusahaan Perbankan yang Terdaftar di Bursa Efek Indonesia Tahun 2014-2018)

2020 ◽  
Vol 8 (1) ◽  
pp. 1
Author(s):  
Chindy Annisa Violeta ◽  
Vanica Serly
Keyword(s):  
Earnings Management ◽  
Firm Value ◽  
Sampling Method ◽  
Stock Exchange ◽  
Tax Avoidance ◽  
Total Sample ◽  
Multiple Regression Model ◽  
Future Research ◽  
Negative Effect ◽  
Collection Methods

The puspose of this study is to determine the effect of earnings management and tax avoidance on firm value. This type of research is quantitative. The study was conducted on banking companies listed on the Indonesia Stock Exchange in 2014-2018, with a total sample of 135 samples using a purposive sampling method. Data collection methods are documentary studies. The analysis was done by using multiple regression model. Earnings management is measured using discretionary accruals that are calculated using the performance matched model and tax avoidance is measured using an effective tax ratio (ETR). The results of this study indicate that (1) earnings management has a positive but not significant effect on firm value. (2) Tax avoidance has a significant negative effect on firm value. Recommendations for futher research are expected to expand the object of research becouse in this study only examines banking companies. In addition, future research can use other models as a measurement of earnings management and look for other independent variables if you want to do the same research.Keywords:  Earnings Management; Tax Avoidance; Firm Value.

scholarly journals Corporate Tax Avoidance, Free Cash Flow and Real Earnings Management: Evidence from Nigeria

2021 ◽  
Vol 9 (1) ◽  
pp. 86-97
Author(s):  
Ahmad Haruna Abubakar ◽  
Noorhayati Mansor ◽  
Wan Izyani Adilah Wan-Mohamad
Keyword(s):  
Earnings Management ◽  
Cash Flow ◽  
Tax Avoidance ◽  
Free Cash Flow ◽  
Real Earnings Management ◽  
Corporate Tax

scholarly journals derivative on the value relevance through tax avoidance and earnings control

2022 ◽  
Vol 6 ◽  
Author(s):  
Suhendra Suhendra ◽  
Etty Murwaningsari ◽  
Sekar Mayangsari
Keyword(s):  
Earnings Management ◽  
Value Relevance ◽  
Tax Avoidance ◽  
Moderating Effect ◽  
Corporate Tax ◽  
High Tendency ◽  
Positive Effect

This investigation expects to inspect and analyze the effect of derivative transactions on earnings management, the role of corporate tax avoidance in  moderating effect of derivative transactions on earnings management, the effect of earnings management worth pertinence of earnings, and the effect of derivative transactions Worth Pertinence of earnings. This examination utilizes information from non-monetary organizations in Indonesia and Thailand for the period 2013-2017 with 91 test of organizations. This investigation, earnings management is calculated based on the Jaggi model and the Jaggi changed model. The value relevance of earnings is calculated based on Ohlson's model. Corporate tax avoidance is calculated based on the book tax difference. The results show that subordinate exchanges have a constructive outcome on earnings management. Corporate tax avoidance has not been proven to strengthen the effect of derivative transactions on earnings management. Earnings management adversely influences the worth pertinence of earnings. Derivative transactions negatively affect the value relevance of earnings. Derivative transactions, especially those with non-hedging criteria, show a high tendency towards earnings management activities. Intercountry testing, derivative transactions have a positive effect on earnings management in Indonesia while in Thailand it does not.

THE IMPACT OF TAX AVOIDANCE, SUSTAINABILITY REPORT DISCLOSURE, AND EARNINGS MANAGEMENT ON FIRM VALUE IN THE DIGITAL ERA WITH CORPORATE GOVERNANCE AS A MODERATING VARIABLES

2021 ◽  
Vol 3 (2) ◽  
pp. 115
Author(s):  
Endro Andayani
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Firm Value ◽  
Tax Avoidance ◽  
Sustainability Reporting ◽  
Sampling Technique ◽  
Absolute Difference ◽  
Negative Effect ◽  
The Impact ◽  
Sustainability Report

<p>This paper aims to determine whether tax avoidance, sustainability reporting, and earnings management affected firm value. Samples were collected from 80 companies listed on the Indonesian Stock Exchange (BEI)between 2015 and 2019. This research is an explanatory study that employs a quantitative approach and purposive sampling as the sampling technique, using the Absolute Difference Value Method to examine  the moderating variable’effect, and SPSS 23 to analyze the data. The finding indicate that while tax avoidance has no negative effect on firm value and Sustainability Report has no positive effect on firm value, earnings management have negative effects on firm value. Corporate Governance did not weaken the effect of tax avoidance on firm value, corporate governance did not strengthen the relationship between sustainability reports and firm value and  Corporate Governance weakens the negative effect of earnings management on firm value. This paper contributes to three different strands of research:determinants of tax avoidance in Indonesia for government literature, evaluation, improve, improvement, and performance for companies;for investors, as it is wordthwhile to consider additional factors in order to aid in  making an informed  assessment of  company’s value in this era of technology.</p>

Tax avoidance and firm value: evidence from China

2014 ◽  
Vol 5 (1) ◽  
pp. 25-42 ◽  
Author(s):  
Xudong Chen ◽  
Na Hu ◽  
Xue Wang ◽  
Xiaofei Tang
Keyword(s):  
Avoidance Behavior ◽  
Firm Value ◽  
Agency Costs ◽  
Fixed Effects ◽  
Tax Avoidance ◽  
Developed Countries ◽  
Corporate Tax ◽  
Content Type ◽  
Information Transparency ◽  
Negative Tone

Purpose – The purpose of this study is to examine whether corporate tax avoidance behavior increases firm value in Chinese context. A large number of studies conduct their designs on the consumption that tax avoidance represents wealth transfer from government to enterprises and therefore enhances firm value. This study argues that, contrast to developed countries, tax avoidance does not necessarily add value to opaque Chinese firms relative to transparent counterparts due to higher agency costs. Design/methodology/approach – Using a large sample of Chinese listed-firms data for the period 2001-2009 and fixed effects regression model, this study examines the relation between tax avoidance and firm value. A series of robustness checks are conducted to alleviate the concern of endogeneity. Findings – The authors find that tax avoidance behavior increases agency costs and reduces firm value. The authors further find that information transparency interacts with corporate tax avoidance, moderating the relation between tax avoidance and firm value. Investors in China react negatively to corporate tax avoidance behavior, but this negative reaction could be mitigated by information transparency. The results are robust to a series of alternative treatments, including varied measures, first-order differential approach and 2SLS. Originality/value – The results suggest that tax avoidance does not necessarily increase firm value, part of gains are encroached by self-serving managers. Moreover, investors in China downplay the significance of tax avoidance, although corporate information transparency could soften their negative tone.

scholarly journals Corporate Tax Avoidance and Firm Value

2009 ◽  
Vol 91 (3) ◽  
pp. 537-546 ◽  
Author(s):  
Mihir A Desai ◽  
Dhammika Dharmapala
Keyword(s):  
Firm Value ◽  
Tax Avoidance ◽  
Corporate Tax

scholarly journals Corporate tax avoidance and firm value: evidence from Brazil

2016 ◽  
Vol 13 (30) ◽  
pp. 114 ◽  
Author(s):  
Silvio Luis Leite Santana ◽  
Amaury José Rezende
Keyword(s):  
Firm Value ◽  
Tax Avoidance ◽  
Corporate Tax

Este trabalho investiga a relação entre a elisão fiscal empresarial e o valor da firma no Brasil. Embora se possa esperar que as práticas de elisão fiscal resultem em geração de valor para o acionista, teorias alternativas sugerem que isto nem sempre ocorre; custos de agência implícitos, detectados recentemente pela literatura, podem exceder os benefícios da economia tributária, causando destruição de valor. Para verificar o que ocorre, foi conduzida uma análise de dados em painel incluindo 323 companhias negociadas em bolsa nos anos de 2006 a 2012, totalizando 1.704 observações do tipo firma-ano. Foram adotados a BTD, controlada por accruals, como proxy para a elisão fiscal e o q de Tobin como proxy para valor da firma. Os resultados mostram que a elisão fiscal e o valor da firma estão negativamente associados. Avaliou-se também o efeito da governança corporativa, encontrando-se evidências limitadas de que ela pode mitigar a destruição de valor.

scholarly journals Corporate Tax Avoidance and Firm Value

2011 ◽  
Author(s):  
Dhammika Dharmapala ◽  
Mihir A. Desai
Keyword(s):  
Firm Value ◽  
Tax Avoidance ◽  
Corporate Tax
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