scholarly journals Institutional Ownership and Corporate Tax Avoidance: New Evidence

2016 ◽  
Vol 92 (2) ◽  
pp. 101-122 ◽  
Author(s):  
Mozaffar Khan ◽  
Suraj Srinivasan ◽  
Liang Tan
Keyword(s):  
Tax Avoidance ◽  
Institutional Ownership ◽  
Regression Discontinuity Design ◽  
Corporate Tax ◽  
Profit Margins ◽  
Exogenous Shocks ◽  
Analyst Expectations ◽  
Tax Shelters ◽  
New Evidence ◽  
Shed Light

ABSTRACT We provide new evidence on the agency theory of corporate tax avoidance (Slemrod 2004; Crocker and Slemrod 2005; Chen and Chu 2005) by showing that increases in institutional ownership are associated with increases in tax avoidance. Using the Russell index reconstitution setting to isolate exogenous shocks to institutional ownership, and a regression discontinuity design that facilitates sharper identification of treatment effects, we find a significant and discontinuous increase in tax avoidance following Russell 2000 inclusion. The tax avoidance involves the use of tax shelters, and immediate benefits include higher profit margins and likelihood of meeting or beating analyst expectations. Collectively, the results shed light on the effect of increased ownership concentration on tax avoidance.

scholarly journals Institutional Ownership and Corporate Tax Avoidance: New Evidence

2016 ◽  
Author(s):  
Mozaffar Khan ◽  
Suraj Srinivasan ◽  
Liang Tan
Keyword(s):  
Tax Avoidance ◽  
Institutional Ownership ◽  
Corporate Tax ◽  
New Evidence

scholarly journals The Corporate Response to Government Attacks on Tax Shelters

2016 ◽  
Vol 8 (1) ◽  
pp. 126
Author(s):  
Noel P. Brock ◽  
Edward J. Schnee ◽  
Shane R. Stinson
Keyword(s):  
Tax Reform ◽  
Tax Avoidance ◽  
Discretionary Accruals ◽  
Corporate Tax ◽  
Corporate Response ◽  
Audit Firms ◽  
Tax Shelters ◽  
Corporate Tax Reform ◽  
Prior Literature ◽  
New Evidence

We examine the effectiveness of four federal government actions, all of which were designed to curb the proliferation of corporate tax shelters dating back to the 1990s, at eliciting measurable changes in characteristics commonly associated with tax shelter firms. Our results suggest that the government’s initial attacks on corporate tax shelters in the early 2000s elicited significant declines in book-tax differences, discretionary accruals, and the use of Big N audit firms, which contributed to gradual reductions in the estimated likelihood of tax sheltering for both multinational and purely domestic firms. Conversely, later attempts to discourage corporate tax shelters proved ineffective, likely due in part to the effectiveness of previous government attacks and a faltering economy. This study addresses calls from prior literature for a better understanding of factors determining corporate tax avoidance and offers new evidence of multi-faceted taxpayer reactions to corporate tax reform.

scholarly journals Tax Avoidance of Mining Companies From the Return on Assets, Institutional Ownership, and Audit Committee Perspectives

2020 ◽  
Vol 1 (2) ◽  
pp. 076-089
Author(s):  
Tjahjani Murdijaningsih ◽  
Maratus Solihah ◽  
Krisnhoe Sukma Danuta
Keyword(s):  
Audit Committee ◽  
Tax Avoidance ◽  
Institutional Ownership ◽  
Significant Decline ◽  
Audit Committees ◽  
Tax Revenue ◽  
Corporate Tax ◽  
Return On Assets ◽  
Mining Companies ◽  
State Revenue

Taxes are the largest state revenue, but tax companies are a burden that can reduce profits received by shareholders. Then in 2019 tax revenue from the mining sector in 2019 experienced a significant decline. Based on this, this study aims to see how the level of profitability of companies, institutional ownership and audit committees affect mining companies in avoiding taxes. By using 19 company samples for the 2016-2018 period, researchers found that profitability and audit committees could increase corporate tax avoidance. whereas institutional ownership has no influence on tax avoidance.

The impact of ownership structure on corporate tax avoidance with corporate social responsibility as mediating variable

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Anissa Dakhli
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Tax Avoidance ◽  
Institutional Ownership ◽  
Corporate Tax ◽  
Data Set ◽  
Content Type ◽  
Corporate Social ◽  
The Impact ◽  
Practical Implications

Purpose The purpose of this paper is to investigate the direct and indirect relationship between institutional ownership and corporate tax avoidance using corporate social responsibility (CSR) as a mediating variable. Design/methodology/approach This study uses panel data set of 200 French firms listed during the 2007–2018 period. The direct and indirect effects between managerial ownership and tax avoidance were tested by using structural equation model analysis. Findings The results indicate that institutional ownership negatively affects tax avoidance. The greater the proportion of the institutional ownership, the lower the likelihood of tax avoidance usage. From the result of the Sobel test, this study indicated that CSR partially mediates the effect of institutional ownership on corporate tax avoidance. Practical implications The findings have some policy and practical implications that may help regulators in improving the quality of transactions and in achieving more efficient market supervision. They recommend to the government to add regulations and restrictions to the structure of corporate ownership to control corporate tax avoidance in French companies. Originality/value This study extends the existing literature by examining both the direct and indirect effect of institutional ownership on corporate tax avoidance in French companies by including CSR as a mediating variable.

scholarly journals INSTITUTIONAL OWNERSHIP AND TAX AVOIDANCE: COMPARATIVE STUDY IN BUMN (BADAN USAHA MILIK NEGARA) AND PRIVATE COMPANIES

2021 ◽  
Vol 6 (2) ◽  
Author(s):  
Ellyzabeth Putri Vizandra ◽  
Elia Mustikasari
Keyword(s):  
Sampling Method ◽  
Stock Exchange ◽  
Tax Avoidance ◽  
Sampling Technique ◽  
Institutional Ownership ◽  
Linear Analysis ◽  
Corporate Tax ◽  
Private Companies ◽  
Significant Difference ◽  
The Government

This study aims to provide empirical evidence regarding the effect of institutional ownership on tax avoidance and differences in tax avoidance in state-owned and private companies. This study uses a quantitative approach with explanatory and comparative methods. The sample of this research is state-owned and private companies listed on the Indonesia Stock Exchange from 2014 to 2018 with a total of 60 companies. The sampling technique in this study uses a purposive sampling method. Hypothesis testing in this study uses Multiple Regression Linear Analysis to examine the effect of institutional ownership on tax avoidance and uses the Independent Sample T-Test to examine differences in tax avoidance in BUMN and private. The results of this study indicate that institutional ownership has no effect on the practice of corporate tax avoidance. This study also finds that there is no significant difference in tax avoidance practices in state-owned and private companies. The results of this study are expected to be suggestions for shareholders, especially institutional ownership to improve their monitoring function to the management to minimize tax avoidance. In addition, the government is expected to provide supervision with the same proportions, both to BUMN and private companies.

CEO Narcissism and Corporate Tax Sheltering

2015 ◽  
Vol 38 (1) ◽  
pp. 1-22 ◽  
Author(s):  
Kari Joseph Olsen ◽  
James Stekelberg
Keyword(s):  
Tax Avoidance ◽  
Personality Characteristics ◽  
Corporate Tax ◽  
Firm Level ◽  
Aggressive Form ◽  
Individual Personality ◽  
Tax Shelters ◽  
Behavioral Tendencies ◽  
The Individual ◽  
Ceo Narcissism

ABSTRACT We examine the effect of CEO narcissism on an especially aggressive form of corporate tax avoidance: tax sheltering. Narcissism is a multifaceted personality trait associated with a sense of superiority and a propensity to engage in questionable behavior. Narcissists feel that they are above the law and are aggressive in pursuing what they believe is theirs. Narcissists also possess heightened motivations to pursue rewards or desirable outcomes while only being weakly motivated to avoid negative outcomes. Consistent with these behavioral tendencies of narcissistic individuals, we document statistically and economically significant effects of CEO narcissism on the likelihood that the CEO's firm engages in corporate tax shelters. Our study contributes to the literature by documenting a mechanism through which the individual personality characteristics of the CEO can affect firm-level tax policies. JEL Classifications: H25; H26; M41.

scholarly journals Does access to credit reduce SMEs’ tax avoidance? Evidence from a regression discontinuity design

2021 ◽  
Vol 7 (1) ◽  
Author(s):  
Xiaowei Kong ◽  
Deng-Kui Si ◽  
Haiyang Li ◽  
Dongmin Kong
Keyword(s):  
Financial Constraints ◽  
Regression Discontinuity ◽  
Tax Avoidance ◽  
Bank Lending ◽  
Rent Seeking ◽  
Policy Implications ◽  
Regression Discontinuity Design ◽  
Corporate Tax ◽  
Access To Credit ◽  
Travel Costs

AbstractThis study investigates the effect of targeted reserve requirement ratio cuts (TRRRCs) on tax avoidance among small and micro enterprises (SMEs) with operating revenues below specific cutoffs in China. Using a regression discontinuity design, we causally show that, by increasing loan availability, TRRRCs significantly alleviate the financial constraints and cash dependence of SMEs and consequently reduce tax avoidance. This is especially the case among firms with lower market power and higher entertainment and travel costs. Our findings provide evidence for the real effect of TRRRCs on corporate tax avoidance and show the inclusive effect of TRRRCs on SMEs. In doing so, we indirectly reveal a rent-seeking channel underlying bank lending, thus offering clear policy implications for regulators.

Is Corporate Social Responsibility Related to Corporate Tax Avoidance? Evidence from a Natural Experiment

2020 ◽  
Author(s):  
Michael A Mayberry ◽  
Luke Watson
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Research Question ◽  
Tax Avoidance ◽  
Third Party ◽  
Corporate Tax ◽  
Exogenous Shocks ◽  
Corporate Social ◽  
Rule Out ◽  
Identification Strategy

We employ states' enactment of constituency statutes as plausibly exogenous shocks to the marginal cost of corporate social responsibility (CSR) and examine the relation between CSRand corporate tax avoidance. We find almost no evidence of an association between the enactment of constituency statutes and tax avoidance. We use confidence intervals and other analysis to rule out low power as an explanation. Using an instrumental variables design, we find evidence that third-party CSR scores increase following constituency statutes, yet without a detectable impact on tax avoidance. The lack of results across multiple proxies and specifications suggests firms decouple CSR from tax policy. Our study introduces a strong identification strategy common in management research to the accounting literature, producing a novel noresult finding on a popular research question.

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