scholarly journals Do Relationship-Based Transactions Matter for Corporate Tax Avoidance? Evidence from China

2018 ◽  
Vol 6 (4) ◽  
pp. 274
Author(s):  
Bin DAI ◽  
Jingyuan WANG ◽  
Huan CHANG
Keyword(s):  
Empirical Study ◽  
Market Competition ◽  
Tax Avoidance ◽  
Business Strategies ◽  
Manufacturing Companies ◽  
Control Rights ◽  
Corporate Tax ◽  
Senior Managers ◽  
Financial Decisions ◽  
Aggressive Tax Avoidance

<p><em>The existing literatures showing that relationship-based transactions would affect company tax avoidance, but with few empirical evidences. This paper makes an empirical study on the topic of relationship-based transations and corporate tax avoidence, by using the data of manufacturing companies from 2008 to 2016, in Chinese A-share listed market, the empirical study shows that the more relationship-based transactions with suppliers (clients), the more aggressive company tax avoidance, which indicates that the bahavior of company tax avoidance is influenced by business strategies. The study also shows that company’s financial decisions may contain selfish motives of powerful executives. Further, the study indicates that relationship-based transactions can boost company’s propensity for aggressive tax avoidance during fierce market competition. Yet, there are varying degrees of diversification in the moderating effects and weakening control rights by senior managers.</em></p>

scholarly journals PROFITABILITAS, KARAKTER EKSEKUTIF, KEPEMILIKAN KELUARGA DAN TAX AVOIDANCE PERUSAHAAN

2020 ◽  
Vol 4 (1) ◽  
pp. 93-106
Author(s):  
Putu Kepramareni ◽  
Ida Ayu Nyoman Yuliastuti ◽  
Ni Wayan Ari Suarningsih
Keyword(s):  
Stock Exchange ◽  
Linear Regression Analysis ◽  
Tax Avoidance ◽  
Multiple Linear Regression Analysis ◽  
Family Ownership ◽  
Manufacturing Companies ◽  
Corporate Tax ◽  
Purposive Sampling ◽  
Analysis Technique ◽  
Positive Effect

Abstrak   Tax avoidance  merupakan upaya yang dilakukan seseorang untuk mengurangi atau meminimalkan kewajiban pajaknya tanpa melanggar ketentuan undang-undang perpajakan yang berlaku. Wajib pajak berusaha untuk meringankan kewajiban pembayaran pajak dengan meminimalkan jumlah pajak yang harus dibayar. Terdapat beberapa faktor yang dapat mempengaruhi seseorang dalam melakukan tax avoidance yaitu profitabilitas, karakter eksekutif dan kepemilikan keluarga. Penelitian ini bertujuan untuk menguji pengaruh dari variabel-variabel tersebut yaitu variabel profitabilitas, karakter eksekutif dan kepemilikan keluarga terhadap variabel tax avoidance. Penelitian ini dilakukan pada perusahaan manufaktur yang terdaftar di Bursa Efek Indonesia selama periode 2014-2018. Sampel yang digunakan dalam penelitian ini sebanyak 14 perusahaan yang diperoleh melalui metode purposive sampling dan diteliti selama 5 tahun sehingga sampel dalam penelitian ini sebanyak 70 sampel. Teknik analisis data yang digunakan dalam penelitian ini adalah teknik analisis regresi linear berganda. Hasil analisis menunjukkan bahwa profitabilitas tidak berpengaruh terhadap tax avoidance perusahaan, sedangkan karakter eksekutif dan kepemilikan keluarga berpengaruh positif terhadap tax avoidance  perusahaan.   Kata kunci: profitabilitas, karakter eksekutif, kepemilikan keluarga dan tax avoidance   Abstract   Tax avoidance is an attempt by someone to reduce or minimize their tax obligations without violating the provisions of applicable tax laws. Taxpayers try to ease the tax payment obligations by minimizing the amount of tax that must be paid. There are several factors that can influence someone in doing tax avoidance, namely profitability, executive character and family ownership. This study aims to examine the effect of these variables, namely profitability, executive character and family ownership on tax avoidance variables. This research was conducted at manufacturing companies listed on the Indonesia Stock Exchange during the 2014-2018 period. The samples used in this study were 14 companies obtained through the purposive sampling method and studied for 5 years so that the samples in this study were 70 samples. Data analysis technique used in this study is multiple linear regression analysis techniques. The analysis shows that profitability has no effect on corporate tax avoidance, while executive character and family ownership have a positive effect on corporate tax avoidance.   Keywords: profitability, executive character, family ownership and tax avoidance

Contingent fit between business strategies and environmental uncertainty

2019 ◽  
Vol 28 (1) ◽  
pp. 139-167
Author(s):  
Dianwicaksih Arieftiara ◽  
Sidharta Utama ◽  
Ratna Wardhani ◽  
Ning Rahayu
Keyword(s):  
Business Strategy ◽  
Tax Avoidance ◽  
Environmental Uncertainty ◽  
Emerging Countries ◽  
Data Availability ◽  
Business Strategies ◽  
Corporate Tax ◽  
Competitive Intensity ◽  
Content Type ◽  
Positive Effect

Purpose This study aims to examine the contingent fit between business strategies and environmental uncertainty and its effect on corporate tax avoidance. Design/methodology/approach This study uses a two-stage linear regression method comprising multinomial logistic regression and panel data regression. Findings This study finds that under highly uncertain conditions, the contingent fit of prospector strategy is higher than the contingent fit of other two strategies, i.e. defender and analyzer strategy. The study fails, however, to demonstrate that under highly uncertain conditions, this study finds that under highly uncertain conditions the contingent fit of a “prospector” strategy is higher than for “defender” and “analyzer” strategies. The study fails, however, to demonstrate that under highly uncertain conditions the contingent fit of a defender strategy is higher than that of an analyzer strategy. The study also finds that the contingent fit between prospector strategy and environmental uncertainty has a positive effect on tax avoidance, and this effect is higher than for the misfit strategies. Moreover, in such environments the fit level of a defender strategy has a negative effect on tax avoidance while environmental uncertainty has a positive effect on tax avoidance. Research limitations/implications This study estimated competition uncertainty using the Herfindahl index to measure competitive intensity in an industry. However, only the data from public listed companies was used due to a lack of data availability for non-public companies. Consequently, further study is recommended to include the total number of companies within an industry as a proxy of competitive intensity. Practical implications The results implied that managers, not only in Indonesia but also in other countries as well, specifically emerging countries (generally the environmental uncertainty in emerging countries is high) should consider the contingent factors when making business strategy decisions. Managers must be aware of the contingent fit with environmental uncertainty, and therefore, must assess external conditions prudently. Furthermore, the results of this study showed that managers should pay more attention to the effects of their decisions on corporate tax avoidance, while aligning their business strategy decisions with corporate tax planning strategy to obtain an optimal outcome for the company. Social implications The Directorate General of Taxes and Board of Fiscal Policy, as regulators, need to comprehend environmental uncertainty to issue various policies that can ease the burden of the taxpayer to remain in business, particularly during the turbulence environment so that can prevent the companies doing illegal practices and will eventually reduce the number of tax avoidance. Originality/value This study developed alternative measure of tax avoidance, which is tax avoidance latent variable score (TAXLVS). The TAXLVS was derived from confirmatory factor analysis of previous existing tax avoidance measurements. This study is also the first that analyzes the effect of business strategy on tax avoidance using contingency approach.

The effect of competition in the product market and financial flexibility on business strategy

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Vahab Rostami ◽  
Leyla Rezaei
Keyword(s):  
Organizational Performance ◽  
Business Strategy ◽  
Market Competition ◽  
Tax Avoidance ◽  
Product Market ◽  
Product Market Competition ◽  
Business Strategies ◽  
Financial Flexibility ◽  
Content Type ◽  
Independent Variable

Purpose This study aims to track product market competition and financial flexibility on firms’ business strategies. Design/methodology/approach For this purpose, 187 listed firms on the Tehran Stock Exchange were selected by the systematic elimination for 2012–2018. The hypotheses were examined using the linear regression model. Ittner and Larcker’s (1997) model assesses the business strategy (dependent variable). The Herfindahl–Hirschman index is used to assess the product market competition (independent variable). Finally, the Frank and Goyal’s (2009) model investigates financial flexibility (independent variable). Findings The findings indicate that competition in the product market has significantly declined the resort of defensive and invasive business strategies and intensified opportunistic analytical and opportunistic strategies, benefiting from financial flexibility and facilitating defensive and opportunistic adaptation and decreased analytic and invasive strategies. Besides, the product market competition contributes to the firm’s financial flexibility and analytical, opportunistic, invasive and defensive strategies. Most of the studies in the field of business strategy analyzed some factors, such as performance (Zhang, 2016), tax avoidance (Higgins et al., 2015) and share pricing risk (Habib and Hasan, 2017). There is no study to assess the effect of business strategy on product market competition and financial flexibility. Originality/value The present study’s findings provide some invaluable concepts for firm managers on the significance of competition in the product market and financial flexibility. Focusing on competition intensity and flexibility level can deal with the board’s ambiguities on market structure and competitive status. The use of profitably competitive investment opportunities leads to selecting the most beneficial strategies, leading to a more efficient allocation of scarce resources and, finally, the enhancement of organizational performance.

Social Trust, Market Competition, and Tax Avoidance: Evidence from Contemporary China

2020 ◽  
Author(s):  
Brian M. Lam ◽  
Gladie Lui ◽  
Connie Shum
Keyword(s):  
Social Trust ◽  
Market Competition ◽  
Tax Avoidance ◽  
Significant Loss ◽  
Educational Institutions ◽  
Negative Relation ◽  
Forensic Accounting ◽  
Accounting Courses ◽  
Aggressive Tax Avoidance ◽  
Corporate Practice

Firms pay their fair share of taxes because they want to be perceived as good corporate citizens. However, managers might engage in tax-avoiding activities if such activities are value-maximizing. Using firms in China, this study focuses on the relation between social trust and corporate practice of tax avoidance for the period 2012 to 2016. It investigates whether firms with headquarters in societies with higher level of social trust are less likely to engage in tax-avoiding activities. It also investigates whether this negative relation is more pronounced for firms in industries that are less competitive. Results show that firms located in provinces with higher social trust level engage less in tax-avoiding activities, and the negative relation is more pronounced for firms in industries that are less competitive. Since corporate tax avoidance leads to significant loss of tax revenues, tax authorities in China should engage the services of forensic accountants to identify those corporations that practice aggressive tax avoidance. Furthermore, China needs to provide more forensic accounting training for practicing accountants and auditors. Educational institutions need to offer more forensic accounting courses in order to fill the gap between forensic accounting practices and education.

An empirical study on relationships amongst success in benchmarking, success in Kaizen, people mindset and organizational dimensions

2018 ◽  
Vol 25 (9) ◽  
pp. 3505-3518
Author(s):  
Joklan I.C. Goni ◽  
Fransisca Tharia ◽  
Nugroho Suryo
Keyword(s):  
Empirical Study ◽  
Small Sample Size ◽  
Small Sample ◽  
Top Management ◽  
Significant Variable ◽  
Manufacturing Companies ◽  
Senior Managers ◽  
Group Company ◽  
Content Type ◽  
Factors Affecting

Purpose The purpose of this paper is to examine factors that most strongly influence success in benchmarking as attempted by Indonesian manufacturers and service companies. It investigates the impacts of success in Kaizen, people mindset and organizational dimensions with success in benchmarking. Design/methodology/approach A total of 100 questionnaires were distributed to senior managers at an 87 percent response rate. Findings This study reveals that success in benchmarking that companies undertake correlates positively with their success in Kaizen, people mindset and organizational dimensions. Research limitations/implications As an empirical study, this work has some limitations that need to be recognized. First, the sample only includes Indonesian companies. Second, as the small sample size resulted in only indicative outcome, more research is needed in this area. Furthermore, there may also have been other factors affecting success in benchmarking. It is, therefore, recommended that the framework be extended to include more variables such as information-technology competency, company status (being a single or group company) and to use other methodologies, such as multiple regression. Practical implications A company can achieve success in benchmarking through implementing success in kaizen, people mindset, formalization, centralization and integration. Industry-wise, formalization and centralization are the variables that impact the success in benchmarking significantly. For services companies, formalization and centralization is the significant variable affecting, whereas, for manufacturing companies success in Kaizen is the significant variable for success in benchmarking. Therefore, for services companies, having documented and implementation policies, regulations and procedures will influence success in benchmarking. The involvement of the top management, budgeting for every functions and unit performance evaluation will result in success in benchmarking. On the other hand, top management commitment and worker involvement are necessary to drive success in Kaizen in manufacturing companies. Originality/value Unlike most of the previous studies on a manufacturing company, this paper examines both manufacturing and services companies especially in Indonesia.

scholarly journals Corporate Risk, Cost Shifting, and Tax Avoidance

2021 ◽  
Vol 13 (2) ◽  
pp. 200-213
Author(s):  
I Nyoman Agus Wijaya ◽  
Enny Prayogo ◽  
Rini Handayani ◽  
Ivan Prihartono
Keyword(s):  
Stock Exchange ◽  
Tax Avoidance ◽  
Manufacturing Companies ◽  
Corporate Tax ◽  
Cost Shifting ◽  
Long Time ◽  
Tax Payments ◽  
Risk Cost ◽  
Corporate Risk ◽  
The Relationship

  Abstract This study aims to investigate relationship between corporate risk, cost shifting, and tax avoidance. Using 50 companies of all manufacturing companies listed in Indonesian Stock Exchange, we try to investigate a corporate risk, cost shifting and tax avoidance in annual report audited over long time periods (5 years) sequentially. Then, we test the relationship between corporate risk and cost shifting to tax avoidance that reduced the firm’s income tax payments. This study provides evidence that companies with high risk are more likely to do tax avoidance and companies that have a good strategy in allocating their costs are driven by the behavior of minimazing tax payments. We also find that the higher of corporate risk will increase corporate tax payment to Internal Revenue Services. Keywords: Corporate Risk, Cost Shifting, and Tax Avoidance

scholarly journals The relation between product market competition and corporate tax avoidance: evidence from Korea

2019 ◽  
Vol 16 (2) ◽  
pp. 313-325 ◽  
Author(s):  
Ilhang Shin ◽  
Sorah Park
Keyword(s):  
Corporate Governance ◽  
Audit Committee ◽  
Market Competition ◽  
Tax Avoidance ◽  
Product Market ◽  
Product Market Competition ◽  
Outside Directors ◽  
Governance Mechanisms ◽  
Corporate Tax ◽  
Internal Governance

This paper examines the effect of industry-wide factors such as product market competition on corporate tax avoidance. Specifically, the focus is on the moderating role of corporate governance in the relationship between product market competition and tax avoidance. To conduct an empirical analysis, a sample of public companies that are listed on the Korea Stock Exchange between 2001 and 2016 is used. The empirical analyses provide the following results. First, product market competition is negatively related to tax avoidance. This suggests that competitive markets act as external corporate governance mechanisms and discipline managers to decrease tax avoidance. Second, the negative association between product market competition and tax avoidance is more pronounced for firms with more independent board of directors and firms with audit committee consisting of outside directors. These findings imply that product market competition acts more effectively when the firm has strong internal governance mechanisms such as board independence and audit committee independence. Therefore, we provide evidence on a complementary relationship between internal governance system and product market competition. The results may be of interest to policy makers and regulators like Korea Fair Trade Commission and Financial Supervisory Service who are involved in promoting market competition, monitoring any abuse of market dominance, and supervising financial reporting quality.

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