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1 – 10 of over 26000Mouna Guedrib and Fatma Bougacha
This paper aims to study the impact of tax avoidance on corporate risk. It also examines the moderating impact of tax risk on the relationship between tax avoidance and firm risk.
Abstract
Purpose
This paper aims to study the impact of tax avoidance on corporate risk. It also examines the moderating impact of tax risk on the relationship between tax avoidance and firm risk.
Design/methodology/approach
Based on available information in the DATASTREAM database about a sample of French firms listed in the CAC 40 from 2010 to 2022, the study uses the feasible generalized least squares method to investigate the impact of tax avoidance on firm risk and the moderating impact of tax risk. To check the robustness of our results, the authors changed the measurement of variables to identify potential biases and they significantly mitigated the endogeneity concerns using instrumental variable regression. Additional estimations were performed, first by using book-tax differences (BTD) and its components, i.e. temporary and permanent, and second by retesting hypotheses of years before the outbreak of the corona virus disease 2019 (COVID-19) pandemic.
Findings
The results show that tax avoidance negatively affects the firm risk while tax risk has a positive effect on firm risk. More importantly, tax risk moderates the negative impact of tax avoidance on the firm risk. When tax avoidance is associated with a high level of tax risk, it leads to a high firm risk. Accordingly, tax avoidance should be considered in conjunction with tax risk when studying the effect put on the firm risk. Further analyses indicate that tax risk moderates the negative relationship between permanent BTD and firm risk.
Research limitations/implications
The major limitation of this study is that it focuses only on French-listed firms, which make it difficult to generalize the results. Furthermore, the authors did not introduce governance variables into our models. An effective governance system and transparent information can reduce some of the perverse effects of risky tax avoidance by reducing the tax avoidance costs. The obtained results are of great interest to researchers who need to include the tax risk concept in their examination of the tax avoidance impacts.
Practical implications
The results are useful for investors wishing to make sound decisions regarding risky tax avoidance practices. Furthermore, the results may signal the need for French policymakers to make more efforts to reduce risky tax avoidance activities that are harmful to investors. They must enforce the existence and the reporting of a tax risk management strategy by firms.
Originality/value
This study contributes to the growing body of literature on the tax avoidance effects with a special focus on firm risk. This study provides the first French evidence of the role of tax risk in the relationship between tax avoidance and firm risk.
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Luca Menicacci and Lorenzo Simoni
This study aims to investigate the role of negative media coverage of environmental, social and governance (ESG) issues in deterring tax avoidance. Inspired by media…
Abstract
Purpose
This study aims to investigate the role of negative media coverage of environmental, social and governance (ESG) issues in deterring tax avoidance. Inspired by media agenda-setting theory and legitimacy theory, this study hypothesises that an increase in ESG negative media coverage should cause a reputational drawback, leading companies to reduce tax avoidance to regain their legitimacy. Hence, this study examines a novel channel that links ESG and taxation.
Design/methodology/approach
This study uses panel regression analysis to examine the relationship between negative media coverage of ESG issues and tax avoidance among the largest European entities. This study considers different measures of tax avoidance and negative media coverage.
Findings
The results show that negative media coverage of ESG issues is negatively associated with tax avoidance, suggesting that media can act as an external monitor for corporate taxation.
Practical implications
The findings have implications for policymakers and regulators, which should consider tax transparency when dealing with ESG disclosure requirements. Tax disclosure should be integrated into ESG reporting.
Social implications
The study has social implications related to the media, which act as watchdogs for firms’ irresponsible practices. According to this study’s findings, increased media pressure has the power to induce a better alignment between declared ESG policies and tax strategies.
Originality/value
This study contributes to the literature on the mechanisms that discourage tax avoidance and the literature on the relationship between ESG and taxation by shedding light on the role of media coverage.
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Md Shamim Hossain, Md.Sobhan Ali, Md Zahidul Islam, Chui Ching Ling and Chorng Yuan Fung
This study examines the impact of profitability, firm size and leverage on corporate tax avoidance in Bangladesh, an emerging South Asian economy.
Abstract
Purpose
This study examines the impact of profitability, firm size and leverage on corporate tax avoidance in Bangladesh, an emerging South Asian economy.
Design/methodology/approach
A balanced panel data of 62 firms from Dhaka and Chittagong stock exchanges in Bangladesh from 2009 to 2020 were used to run the regression. This study employed the fully modified ordinary least squares (FMOLS) and dynamic ordinary least squares (DOLS) to examine the hypotheses.
Findings
The findings show that large firms positively impact corporate tax avoidance. Similarly, profitability and leverage are positively associated with tax avoidance, and the results are significant. Furthermore, the study conducts robustness tests that confirm the findings.
Research limitations/implications
The use of cash effective tax rate (ETR) to investigate firms’ tax avoidance practices poses some limitations, and the results should be interpreted cautiously.
Practical implications
The current study may help policymakers better enhance tax collection from business firms. The findings could serve as a valuable input for effectively monitoring tax collection from large profit-earning firms.
Originality/value
To the authors' best knowledge, this is the first historical attempt in Bangladesh to use panel data to examine the relationship between the firm’s level characteristics and corporate tax avoidance. Panel data often provides greater flexibility with large data, simplifying calculation and statistical analysis.
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Fatih Çelik, Selçuk Yasin Yıldız, Behcet Yalin Ozkara, Mehmet Safa Çam and Blend Ibrahim
The study investigates the antecedents and consequences of digital ad avoidance in the e-commerce industry. This study aims to investigate how digital ad avoidance relates to…
Abstract
Purpose
The study investigates the antecedents and consequences of digital ad avoidance in the e-commerce industry. This study aims to investigate how digital ad avoidance relates to internet usage over time, using a two-wave longitudinal research design. This study also explores how real-world advertising clutter (clutter and non-clutter) affects these relationships.
Design/methodology/approach
The data were collected from 192 online consumers in Türkiye, and a two-wave longitudinal research design and structural equation modeling were conducted to test the hypotheses of the conceptual model.
Findings
The results indicated that perceived goal impediment and prior negative experience had positive effects on affective avoidance in both ad-clutter and non-clutter periods. Further, affective avoidance had a significant positive effect on both cognitive and behavioral avoidance in either period. In addition, ad clutter moderated the effects of cognitive and behavioral avoidance on online purchase intention.
Originality/value
This research provides new evidence of the crucial role perceived goal impediment, prior negative experience and perceived control each play in driving digital ad avoidance. This paper contributes to the body of knowledge in the field by exploring how advertising clutter (both cluttered and non-cluttered settings) moderates these relationships through a two-wave longitudinal study.
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This paper aims to examine whether tax disclosure in Global Reporting Initiative (GRI)-based sustainability reporting mitigates aggressive tax avoidance.
Abstract
Purpose
This paper aims to examine whether tax disclosure in Global Reporting Initiative (GRI)-based sustainability reporting mitigates aggressive tax avoidance.
Design/methodology/approach
This study uses a multiple regression method for 714 nonspecially taxed firms listed on the Indonesia Stock Exchange in 2014–2018.
Findings
The findings demonstrate that disclosing tax payments in GRI-based sustainability reports reduces aggressive tax avoidance. Additional analysis indicates that the number of GRI-based sustainability reports positively affects aggressive tax avoidance. However, disclosing tax payments in multiple GRI-based sustainability reports negatively affects aggressive tax avoidance.
Originality/value
Recent prior studies demonstrate that aggressive tax avoidance does not indicate an organizational culture that devalues corporate social responsibility. This paper argues that firms cannot find the link between tax and corporate social responsibility when tax payments are not incorporated in sustainability reports. GRI considers tax a sustainability issue and seeks to institutionalize this concept by recommending that firms disclose taxes in their sustainability reports. This research analyses whether disclosing taxes in GRI-based sustainability reports may serve as a form of soft law by convincing firms that tax is a sustainability issue, thereby reducing their tax avoidance. This topic has received little attention in previous research.
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Saeed Rabea Baatwah and Khaled Hussainey
This study aims to examine how new regulation changes for the auditor’s report, so-called key audit matters (KAMs), influence tax avoidance.
Abstract
Purpose
This study aims to examine how new regulation changes for the auditor’s report, so-called key audit matters (KAMs), influence tax avoidance.
Design/methodology/approach
This study uses data from firms listed on the Omani capital market over the period 2012–2019 and analyzes these data using pooled panel data regression with a robust standard error. It uses two common proxies for tax avoidance and two measures for the KAMs disclosure requirement.
Findings
This study finds a sharp decrease in the effective tax rate following the introduction of KAMs disclosure and the issuance of more KAMs in audit reports. This result is supported by several robustness checks. In an additional analysis, the authors observe interesting results, indicating that real earnings management mediates this association, while the audit committee plays a moderating role. The authors do not find a moderating effect of Big4 on this association, but find discrepancies within the Big4 firms in relation to this moderating effect.
Originality/value
The results of this study indicate that although the introduction of the KAMs disclosure requirement may have positive consequences, it may also lead to unintended negative consequences. This conclusion has not been comprehensively reported in literature.
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Kirsten Cook, Tao Ma and Yijia (Eddie) Zhao
This study examines how creditor interventions after debt covenant violations affect corporate tax avoidance. Using a regression discontinuity design, we find that creditor…
Abstract
This study examines how creditor interventions after debt covenant violations affect corporate tax avoidance. Using a regression discontinuity design, we find that creditor interventions increase borrowers' tax avoidance. This effect is concentrated among firms with weaker shareholder governance before creditor interventions and among those with less bargaining power during subsequent debt renegotiations. Our results indicate that creditors play an active role in shaping corporate tax policy outside of bankruptcy.
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Elmira Shahriari, Hamid Abbassi, Ivonne M. Torres, Miguel Ángel Zúñiga and Nourah Alfayez
The purpose of this paper is to examine the extent to which cultural differences and slogan meaning type affect the role of comprehension in attitude toward the ad (Aad) and…
Abstract
Purpose
The purpose of this paper is to examine the extent to which cultural differences and slogan meaning type affect the role of comprehension in attitude toward the ad (Aad) and attitude toward the brand (Abrand) formation.
Design/methodology/approach
In an online experiment, a total of 256 adult participants from the USA (ranged in age from 19 to 26 years old) and 184 participants from France (ranged in age from 18 to 28) were randomly assigned to one of the two conditions (slogan: single meaning vs polysemous) in a between-subjects experimental design. After getting exposed to the ad, participants responded to questions related to their Aad, Abrand, comprehension, uncertainty avoidance and demographics.
Findings
Results from this research demonstrate the moderating effect of uncertainty avoidance and slogan type (single meaning vs polysemous) on the relationship between comprehension and Aad. The authors show that for polysemous (and not single meaning) slogans, comprehension results in more favorable Aad for low uncertainty avoidance individuals than for high uncertainty avoidance individuals. In addition, the authors demonstrate the mediating effect of Aad in the relationship between comprehension and Abrand.
Research limitations/implications
The authors used nationality as a proxy for culture. Future research should include other cultural dimensions in the development of conceptual models and analysis of data. Another limitation is that the authors used a college student sample for this research. A more representative sample should be used in future research to examine cultural differences in interpreting adverting messages. One other limitation concerns the measurement tool the authors used to measure objective versus subjective comprehension in this research. While the theoretical foundations of the two modes of comprehension are clear and robust, improved measurement tools can enhance the validity and reliability of future research. Finally, the authors suggest that future research examine the effect of such variables as figure-ground contrast, figure attractiveness, stimulus repetition, prototypicality, symmetry and semantic or visual priming that may impact the processing of brand slogans.
Practical implications
This study argues that the processing of brand slogans in advertising is impacted by culture. Individuals from different cultures perceive and comprehend brand slogans differently. This study contributes to the research stream that examines the influence of cultural dimensions on the effectiveness of advertising by focusing more precisely on the impact of uncertainty avoidance (one of Hofstede’s cultural dimensions). In the case of single meaning slogans, advertisers might diminish the use of objective comprehension advertising strategies to influence both individuals with high and low uncertainty avoidance. In the case of polysemous slogans, advertisers should consider that consumers with high uncertainty avoidance (vs low uncertainty avoidance) are impacted more by subjective comprehension (vs objective comprehension) when forming Aad and Abrand.
Originality/value
This research contributes meaningfully to the marketing literature by examining previous work on ad slogan processing through subjective vs objective comprehension and extending the analysis by incorporating culture as an important factor.
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Henry Huang, Li Sun and Joseph Zhang
This paper examines the relationship between environmental uncertainty and tax avoidance at the firm level. We posit that managers faced with more uncertain environments are…
Abstract
This paper examines the relationship between environmental uncertainty and tax avoidance at the firm level. We posit that managers faced with more uncertain environments are likely to engage in more tax avoidance activities. We find a significant and negative relationship between environmental uncertainty and effective tax rates, and our results persist through a battery of robust checks. We further find that managerial ability mitigates the above relationship. Moreover, we find that small, highly leveraged, and innovative firms operating in uncertain environments engage in more tax avoidance.
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This paper aims to examine the impact of Zakat avoidance on firm value and investigates how board characteristics moderate this relationship within the context of Saudi Arabia, a…
Abstract
Purpose
This paper aims to examine the impact of Zakat avoidance on firm value and investigates how board characteristics moderate this relationship within the context of Saudi Arabia, a Muslim nation.
Design/methodology/approach
Using panel data from 2009 to 2020, encompassing 78 nonfinancial firms listed on the Saudi Stock Exchange, this study constructs an enhanced measure of Zakat avoidance that integrates insights from tax avoidance research, Shariah principles and the regulations of the Zakat, Tax and Customs Authority. This research uses empirical techniques, including panel data regressions and interaction analysis to investigate how board characteristics may influence this relationship.
Findings
Descriptive analysis reveals pervasive Zakat compliance, underscoring the effectiveness of Saudi Arabia’s robust Zakat system. Regression results indicate a positive association between Zakat payment and firm value. Remarkably, board characteristics exhibit no significant link to Zakat avoidance, emphasizing the potency of the Zakat system and religious adherence. However, the moderation analysis reveals that board independence and meeting frequency positively moderate the relationship between Zakat avoidance and firm value.
Practical implications
The study emphasizes the vital importance of upholding Zakat obligations to cultivate trust among stakeholders and amplify firm value. It advocates for governance frameworks that foster vigilant oversight and independence, ultimately enhancing a firm’s overall worth. Furthermore, the study’s findings provide valuable insights for corporate leaders, investors, policymakers and society as a whole, facilitating the promotion of ethical financial conduct and driving holistic economic development.
Originality/value
This research introduces novel insights by scrutinizing the intricate interplay of Zakat avoidance, board dynamics and firm value within the context of a culturally distinctive emerging economy. The development of a distinct Zakat avoidance metric, along with comprehensive empirical assessment, contributes to the originality of the study. Moreover, the investigation into the moderating influence of board characteristics adds value to the existing body of knowledge.
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