Environmental regulation and corporate tax avoidance—Evidence from China

In this study, we used a difference-in-difference (DID) approach to analyze the effect of environmental regulation on corporate tax avoidance behavior based on China’s carbon emissions trading pilot policy of 2013. Our findings were as follows: (1) Environmental regulation has led companies to adopt further tax evasion behaviors. Furthermore, the core conclusion was confirmed after a series of robust and endogenous tests, such as parallel trends and PSM-DID (propensity score matching-difference-in-difference). (2) Environmental regulations increase tax avoidance activities by reducing corporate cash flows. (3) The influence of environmental regulation on firm tax evasion is highly pronounced among non-state-owned enterprises, big-scale enterprises, and enterprises with a high degree of industry competition.

Changes in the effect of corporate tax avoidance on the cost of debt over the past 25 years

Purpose This study aims to examine how the effect of corporate tax avoidance on the cost of debt has changed in the period 1993–2017. Although it is known that tax avoidance has significantly increased during this period (Dyreng et al., 2017), little evidence exists on how this change alters the effect of tax avoidance on the cost of debt. This study investigates how changes in tax avoidance modify the association between tax avoidance and the cost of debt. Design/methodology/approach By using a comprehensive sample of 15,825 loan facilities issued to US public firms in the period 1993–2017, this study tests the time-series changes in the association between tax avoidance and the cost of debt. Findings This study finds that a positive association between tax avoidance and the cost of debt has been declined over the past 25 years. Accordingly, tax avoidance in general no longer increases the loan spread after the enactment of domestic production activities deduction. However, the risker end of tax avoidance does still increase the loan spread. Originality/value This study spotlights the time-series changes in the effect of corporate tax avoidance on the cost of debt, showing how lenders perception on corporate tax avoidance has altered in accordance with changes in corporate tax practice.

Does the Carbon Emissions Trading Policy Increase Corporate Tax Avoidance? Evidence from China

Based on the natural experiment of carbon emissions trading pilots in China, this paper investigates the effect of environmental regulation on corporate tax avoidance. The results show that: 1) Market-incentivized environmental regulation significantly increase the level of corporate tax avoidance. 2) Heterogeneity analysis shows that the effect is more obvious on the non-state-owned firms, firms with severe financing constraints, and firms in highly competitive industries. 3) We find that the reduction of cash flow is the channel for environmental regulation to affect corporate tax avoidance. 4) Further analysis shows that government subsidies can alleviate the enhancement of tax avoidance by environmental regulation. The more government subsidies a company receives, the less tax avoidance it has.

derivative on the value relevance through tax avoidance and earnings control

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.

What Determine the Corporate Tax Rates During the COVID-19? Evidence From 113 Countries

Fiscal policy implications become an important tool to soften the negative consequences of the COVID-19 pandemic. Given this backdrop, this paper analyses the drivers of corporate tax rates during the COVID-19 pandemic (i.e., in 2020 and 2021). The results from 113 advanced and developing economies show that a higher level of the COVID-19-related uncertainty is positively associated with the corporate tax rates. Similarly, the country size (measured by total population) increases the corporate tax rates. Per capita income is negatively related to the corporate tax rates, but this evidence is insufficient to consider different estimation techniques. The paper also discusses potential fiscal policy implications for the driving mechanism of corporate tax rates for the post-COVID-19 era.

Tax Avoidance, Tax Risk, and Corporate Governance: Evidence from Korea

This study examines the association between the effective corporate tax rate and the volatility of future effective corporate tax rates in Korean companies. We analyzed the effect of corporate governance on the association between tax avoidance and tax risk. Our sample is comprised of all the firms listed on the Korea Composite Stock Price Index market. We measure each firm’s tax avoidance as GAAP ETR, Cash ETR, and BTD, and use the corporate governance rating of the Korea Corporate Governance Service to measure corporate governance. Our results show that the volatility of the effective corporate tax rate and the effective corporate tax rate would have a significant negative association. Our results show that tax risk decreases when the corporate tax avoidance level increases and the tax risk increases when the corporate tax avoidance level decreases. In addition, we find that the better the corporate governance structure, the higher the level of supervision and control of managers, thereby mitigating the impact of tax evasion on future corporate tax risk. The findings of this study regarding tax avoidance and corporate governance are important for investors because tax risk can significantly affect investor welfare.

Corporate Taxation in a Circular Economy

A circular economy leads to challenges for the system of corporate taxation. However, there exist already a legal rationale for the levy of corporate tax in a circular economy. Such a rationale, a convincing raison d’être for corporate taxation in a circular economy, contributes to the legitimacy for a green corporate tax. I explore some new measures in corporate taxation that are consistent with a circular economy.

Fiscally Responsible Businesses as a Result of COVID-19 Pandemic Shock

The COVID-19 pandemic and COVID-19 crisis represent impressive motivating forces for advancement, change, evolution, and improvement at a global level. The study focuses on the OECD latest developments in international tax reform work on base erosion and profit shifting (BEPS) in the courageous attempt to promote novel global initiatives for responsible tax and to support ambitious global actions for responsible tax principles. The results show the need to establish fiscally responsible businesses as a result of COVID-19 pandemic shock, thus taking back control of countries' tax systems by putting an end to corporate tax evasion and tax havens. The findings address the importance of being in line with tax principles, encouraging responsible financial transactions and behaviors.