scholarly journals Corporate Tax Avoidance of Malaysian Public Listed Companies: A Multi-Measure Analysis

2021 ◽  
Vol 12 (1) ◽  
pp. 4-4
Author(s):  
Nirmala Devi Mohanadas ◽  
Abdullah Sallehhuddin Abdullah Salim ◽  
Suganthi Ramasamy
Keyword(s):  
Empirical Studies ◽  
Tax Avoidance ◽  
Listed Companies ◽  
Developed Countries ◽  
The United States ◽  
Corporate Tax ◽  
Single Measure ◽  
Corporate Strategies ◽  
Tax Returns ◽  
Avoidance Level

While the topic of corporate tax avoidance has been experiencing ceaseless attention among researchers, its empirical aspect is still facing the challenge of constructing a single universally accepted measure of such practice. Due to the confidential nature of tax returns, most empirical studies have had to rely on financial statements information to developed proxy measures such as effective tax rates (ETRs) and book-tax differences (BTDs) (Hanlon & Heitzman, 2010). Nevertheless, these proxies possess their individual advantages as well as limitations. Such available choices may therefore cause confusions to the researchers in choosing the most suitable measure for their corporate tax avoidance studies. As the mainstream studies on corporate tax avoidance have focused mostly on developed economies like the United States, United Kingdom, and Australia, there is a scarcity of such studies in developing countries (Salihu et al., 2015). The unique jurisdictional nature of tax laws and enforcement systems hinder the extant findings' applicability on less economically-developed countries, especially those highly dependent on their corporate income tax revenue which is especial true with regard to Malaysia (Mohanadas et al., 2020). Though not as abundant in numbers, extant published studies had found that Malaysian public listed companies were indeed being consistently tax-avoidant since the 1990s. Nevertheless, these studies had respectively employed only a single measure of corporate tax avoidance. Indeed, nearly all had used variations of ETR while only a few had applied BTD measures. Their mutually exclusive application of ETR and BTD measures could negatively impact their findings' ability to capture tax-deferring corporate strategies (Hanlon & Heitzman, 2010; Lennox et al., 2013). It thus worsened the risk of potential distortion in the results of tax avoidance level which would led to flawed conclusions being made. In view of the above, this study seeks to measure corporate tax avoidance level of Malaysian public listed companies for the years 2015 until 2019 using both ETR and BTD measures. Furthermore, this study aims to analyse how closely these two measure are related in their respective appraisals of the companies' tax avoidance level. Keywords: Corporate Tax Avoidance; GAAP ETR; Cash ETR; Total BTD; Permanent BTD.

Are corruption and corporate tax avoidance in the United States related?

2021 ◽  
Author(s):  
Ahmed Al-Hadi ◽  
Grantley Taylor ◽  
Grant Richardson
Keyword(s):  
United States ◽  
Tax Avoidance ◽  
The United States ◽  
Corporate Tax

scholarly journals Covid-19 and corporate tax avoidance: Measuring long-run tax burdens as an alternative bailout test

2021 ◽  
Vol 4 (3) ◽  
pp. 216-244
Author(s):  
Subagio Efendi
Keyword(s):  
Financial Aid ◽  
Income Tax ◽  
Tax Avoidance ◽  
Tax Compliance ◽  
Total Sample ◽  
Ordinary Least Squares ◽  
Corporate Tax ◽  
Long Run ◽  
Tax Returns ◽  
Avoidance Measures

This study fills the gap in the tax authority’s Covid-19 financial aid verifications by examining, and nominating, Long-run ETR (Dyreng et al., 2008) as the better corporate tax avoidance measure in excluding tax evader firms from the broad stimulus programs. Analysing confidential tax returns of 4,752 largest firms (32,120 firm-years) in Indonesia over 2009 to 2017 periods, this study found 18.12 percent of total sample firms is able to retain its Long-run ETR below 10 percent, which indicates continual tax avoidance activities by these firms during observation periods. Moreover, applying univariate and multivariate Ordinary Least Squares and Panel Data estimations, this study reveals, relative to other tax avoidance measures, Lagged Cash ETR (Lisowsky, 2010; Lisowsky et al., 2013) present the most consistent reliability in predicting long-run income tax burdens. Thus, this study asserts, in the conditions of computing Long-run ETR is costly and impractical (i.e. because of data unavailability), tax authority and policymakers can directly analyse firms’ Lagged Cash ETR to gauge their long-run income tax burdens and tax compliance behaviours prior the economic downturn. 

scholarly journals The Vital Role of Gender Diversity on Corporate Outcomes: The Need for Empirical Studies Concerning Frontier Markets

2015 ◽  
Vol 7 (2) ◽  
pp. 183 ◽  
Author(s):  
Bazeet Olayemi Badru ◽  
Hauwa Daniyan Bagudu ◽  
Abdulmumini Baba Alfa ◽  
Abdulmumini Baba Alfa
Keyword(s):  
Career Planning ◽  
Empirical Studies ◽  
Critical Mass ◽  
Gender Diversity ◽  
Developed Countries ◽  
The United States ◽  
Vital Role ◽  
Women's Development ◽  
Female Representation

<p>The purpose of the study is to review empirical studies related to gender diversity on corporate outcomes and suggest the need for more empirical research on gender diversity in frontier markets. Several empirical studies have identified the need for a critical mass of female directors and executives in corporate firms. This review further justifies the clamour for more female representation on boards globally. Nigeria is a country that has very weak corporate governance compared to the United States (US) and other developed countries. Therefore, the present study suggests that more empirical studies in this area should be carried out and widely explored. It is hoped that capital market regulatory authority can consider the need for 35% women in public institutions and corporate settings. In other words, there is an urgent need for the implementation of this policy as this would have implications for women’s development and career planning.</p>

scholarly journals Does Corporate Social Responsibility Influence Corporate Tax Avoidance of Chinese Listed Companies?

2018 ◽  
Vol 10 (12) ◽  
pp. 4549 ◽  
Author(s):  
M.A. Gulzar ◽  
Jacob Cherian ◽  
Muhammad Sial ◽  
Alina Badulescu ◽  
Phung Thu ◽  
...  
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Tax Avoidance ◽  
Listed Companies ◽  
Primary Objective ◽  
Corporate Tax ◽  
Effective Tax Rate ◽  
Tax Rate ◽  
Chinese Listed Companies ◽  
Corporate Social

The primary objective of this paper is to empirically examine whether corporate social responsibility (CSR) influences corporate tax avoidance (CTA) of Chinese listed companies. The study is based on a sample of 3481 firm-year observations from 2009 to 2015 using CSR ratings from the Rankins (RKS) corporate social responsibility ratings agency in China, and all financial data extracted from the China Stock Market and Accounting Research (CSMAR). The authors foundthat CSR is negatively related to the current and cash effective tax rate (proxies of corporate tax avoidance), suggesting that responsible firms are more involved in tax avoidance as compared to less responsible firms. Their findings are robust against different control variables. Additionally, to the best of the authors’ knowledge, the paper is one of the first to document an empirical association between CSR and corporate tax avoidance of Chinese listed companies.

International Transfer Pricing and Tax Avoidance: Evidence from Linked Trade-Tax Statistics in the United Kingdom

2020 ◽  
Vol 102 (4) ◽  
pp. 766-778 ◽  
Author(s):  
Li Liu ◽  
Tim Schmidt-Eisenlohr ◽  
Dongxian Guo
Keyword(s):  
United Kingdom ◽  
Multinational Firms ◽  
Transfer Pricing ◽  
Tax Avoidance ◽  
Tax Rates ◽  
Corporate Tax ◽  
The United Kingdom ◽  
Tax Returns ◽  
Medium Level ◽  
Transfer Prices

This paper employs unique data on export transactions and corporate tax returns of UK multinational firms and finds that firms manipulate their transfer prices to shift profits to lower-taxed destinations. It shows that the 2009 tax reform in the United Kingdom, which changed the taxation of corporate profits from a worldwide to a territorial system, led to a substantial increase in transfer mispricing. It also provides evidence for a trade creation effect of transfer mispricing and estimates substantial transfer mispricing in non-tax-haven countries with low- to medium-level corporate tax rates, and in R&D intensive firms.

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 Is Incorporation the Solution to the Enigma of Corporate Tax Residency for International Tax Purposes?

2020 ◽  
Vol 7 (4) ◽  
pp. 35-47
Author(s):  
Charles Edward Andrew Lincoln
Keyword(s):  
Tax Evasion ◽  
Tax Avoidance ◽  
The United States ◽  
Vertical Equity ◽  
Corporate Tax ◽  
Economic Reality ◽  
International Tax ◽  
And Control ◽  
Jobs Act ◽  
Central Management

Incorporation of a company for testing residency—if applied uniformly—is likely the best and most accurate way to reflect corporate residency for tax purposes. However, it does not always reflect economic reality. There is not a consensus on what the best approach is. The Organization for Economic Cooperation and Development (“OECD”) countries overwhelmingly use three tests for residency: incorporation, central management and control, and domicile. Indeed, a court in the United States or other jurisdictions may often ask if tax-avoidance motives exist when incorporation occurs in one jurisdiction and central management and control occurs in another. This Article follows the 2017 Tax Cuts and Jobs Act on many international tax provisions that caused a shift in thinking at both the U.S. level, and at the international level in terms of deciding what formulations would be the best way to ensure proper taxation while promoting horizontal and vertical equity. The genesis of this Article is a response and critique of an article on the same subject by the same author: Charles Edward Andrew Lincoln IV, Is Incorporation Really Better Than Central Management and Control for Testing Corporate Residency? An Answer to Corporate Tax Evasion and Inversion, 43 Ohio N.U. L. Rev. 359 (2017). The author now critiques the point of that article and comes to a different conclusion based on different criteria: specifically, new case law, Musgrave’s economic theory of accretion of wealth, and the importance of substance-over-form doctrines.

The Use of Compensation for Tax Avoidance by Owners of Small Corporations

2005 ◽  
Vol 27 (1) ◽  
pp. 73-90
Author(s):  
Gregory G. Geisler ◽  
Sally Wallace
Keyword(s):  
Empirical Evidence ◽  
Tax Avoidance ◽  
Professional Services ◽  
Corporate Tax ◽  
Taxable Income ◽  
Marginal Change ◽  
Tax Returns ◽  
Using Data

This study provides empirical evidence on the extent to which taxes influence owners' compensation in small (fewer than 500 employees) Subchapter Selecting corporations (S corporations), taxable corporations that provide professional services (PSC corporations), and other taxable corporations (C corporations). Paying additional compensation to owner-employees likely increases the total after-tax income for PSC corporations with positive taxable income. Paying additional compensation to owner-employees is, however, less likely to increase the total after-tax income for C corporations and does not increase the total after-tax income for S corporations. Using data from the corporate tax returns of 503 small corporations, this study examines the marginal change in owners' compensation as taxable income changes. The study finds that, per dollar of taxable income, PSC corporations increase compensation to owneremployees significantly more than C corporations.

Is the Corporate Tax Shifted? Empirical Evidence from Asean

1985 ◽  
Vol 13 (1) ◽  
pp. 21-46 ◽  
Author(s):  
Parthasarathi Shome
Keyword(s):  
Income Tax ◽  
Critical Evaluation ◽  
Developed Countries ◽  
The United States ◽  
The Philippines ◽  
Tax Revenue ◽  
Corporate Tax ◽  
Asean Member ◽  
The United Kingdom ◽  
Incidence Studies

The importance of the corporation income tax in overall tax revenue is as high in ASEAN member countries—Indonesia, Malaysia, the Philippines, Singapore, and Thailand—as in selected developed countries such as the United Kingdom and the United States. This article surveys available fiscal incidence studies for ASEAN members and, after a critical evaluation of their methodologies, employs a two-sector general equilibrium model in order to study the incidence of the corporation income tax in ASEAN. It concludes that, except in Singapore, the tax is borne entirely by the owners of capital in contrast to the usual presumption that the tax is shifted. The policy implication of capital across the economy bearing the corporate tax is that double taxation of dividends—present, at least partially, in each ASEAN member—should be curtailed if these economies are to avoid the necessarily detrimental ramifications for capital formation.

Does family ownership reduce corporate tax avoidance? The moderating effect of audit quality

2017 ◽  
Vol 32 (7) ◽  
pp. 731-744 ◽  
Author(s):  
Safa Gaaya ◽  
Nadia Lakhal ◽  
Faten Lakhal
Keyword(s):  
Family Firms ◽  
Audit Quality ◽  
Tax Avoidance ◽  
Developed Countries ◽  
Moderating Effect ◽  
Family Ownership ◽  
Corporate Tax ◽  
External Audit ◽  
Content Type ◽  
Minority Interests

Purpose The purpose of this paper is to shed light on the effect of family ownership on corporate tax avoidance. It also investigates whether audit quality affects tax avoidance practices by family firms. Design/methodology/approach Based on a sample of 55 Tunisian listed companies from 2008 to 2013, the authors use GLS regression models estimated with robust standard errors, clustered at the firm level. Findings The results show that family ownership is positively associated with corporate tax avoidance practices, suggesting that families expropriate minority interests by extracting rents from tax-saving positions. These practices are less prominent after the 2011 Tunisian revolution, suggesting that the pressure from governments and non-governmental organizations against corruption and unethical behavior has increased after the revolution. However, the findings show that audit quality curbs the incentives of family firms to engage in aggressive tax positions, supporting the moderating effect of audit quality on the relation between family ownership and tax avoidance. Research limitations/implications These findings suggest that Tunisian family firms are likely to expropriate minority interests by extracting rents from tax-saving positions. However, in presence of high-quality audit, the relation turns negative, suggesting that external audit quality is an efficient corporate governance device that is likely to monitor family corporate decisions. Originality/value This paper extends previous research by investigating the moderating effect of external audit quality on the relation between tax avoidance and family ownership. It also examines tax avoidance by family firms in a unique setting: Tunisia, a transitioning economy subsequently to the 2011 revolution, where investors’ rights are weakly protected and the financial market is not well-developed as in more developed countries.

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