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Article
Publication date: 16 June 2022

Arfah Habib Saragih and Syaiful Ali

This study examines the moderating effect of XBRL mandatory adoption on the association between managerial ability and corporate tax outcomes.

Abstract

Purpose

This study examines the moderating effect of XBRL mandatory adoption on the association between managerial ability and corporate tax outcomes.

Design/methodology/approach

This study used a quantitative method with panel data regression models using a sample of listed firms on the Indonesia Stock Exchange from 2010 to 2019.

Findings

The regression results indicate that XBRL adoption moderates the relationship between managerial ability on tax avoidance and tax risk. Firms with higher managerial ability have relatively greater tax avoidance practices and lower tax risk following XBRL adoption. In this study, the authors document unfavorable and unexpected consequences of XBRL in an emerging country.

Research limitations/implications

Results are from a sample of firms from one emerging country.

Practical implications

It becomes important and necessary to develop more and better taxonomies with standardized extensions related to taxes information in the XBRL financial reporting to support the tax administrator’s performance in assessing firms’ tax avoidance and tax risk. The authors underscore the importance of improving taxes tags, including tags from financial statements and the disclosure section. This study may also inform policymakers in other countries that more adequate tax tags are needed to leverage benefit from XBRL adoption in monitoring and assessing corporate tax avoidance and tax risk.

Originality/value

This study is among the first to test an explanation for the moderating role of XBRL adoption on the association between managerial ability and corporate tax avoidance and tax risk.

Details

Journal of Applied Accounting Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0967-5426

Keywords

Article
Publication date: 21 April 2022

Imen Khelil and Hichem Khlif

This paper aims to review the empirical literature dealing with the association between family firms and tax avoidance.

Abstract

Purpose

This paper aims to review the empirical literature dealing with the association between family firms and tax avoidance.

Design/methodology/approach

Empirical papers are collected based on electronic searches in several editorial sources (e.g. Elsevier, Emerald, Meridian Allenpress, Springer, Sage, Taylor and Francis and Wiley-Blackwell) in family-related, accounting and finance journals. Key words used to identify relevant studies are “family firms” or “family ownership” combined with “tax avoidance”, “tax aggressiveness”, “tax evasion” and “tax heaven”. This search yields 21 published papers over the period of 2010–2022.

Findings

The summary of empirical studies examining the relationship between family firms and tax avoidance suggests that the majority of them have been conducted in Germany, USA and Taiwan and other European civil law countries. The association between family firms and tax avoidance is negative in USA, Finland and Belgium. By contrast, the relationship between family firms and tax avoidance is positive and significant in other developed (Germany and Italy) and developing economies (Brazil, India, Malaysia and Tunisia). In Taiwan, the impact of family firms on tax avoidance depends on corporate opacity that mitigates the negative impact of family firms on tax avoidance.

Practical implications

With respect to regulators, this review informs fiscal authorities that family firms are associated with high levels of tax aggressiveness in some settings (e.g. Brazil, Germany, Italy and Tunisia). Accordingly, they should be aware about this tax management behavior in family firms to avoid its adverse effect on tax revenues. With respect to auditors, this study alerts them about the necessity to consider fiscal audit risk linked to family firms when planning their audit missions especially in countries characterized by high level of corporate opacity.

Originality/value

This literature review represents a first historical record and an introduction for accounting scholars who aim to investigate the topics linked to tax aggressiveness in the family firms’ context. It also highlights some limits related to this stream of research and offers future research perspectives.

Details

Journal of Financial Crime, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1359-0790

Keywords

Article
Publication date: 25 April 2022

Muhammad Taufik

This study aims to shed light on Shari’ah supervisory boards (SSBs) and the possibilities of Islamic banks to reduce the tax avoidance. Performance and Shari’ah compliance…

Abstract

Purpose

This study aims to shed light on Shari’ah supervisory boards (SSBs) and the possibilities of Islamic banks to reduce the tax avoidance. Performance and Shari’ah compliance have been extensively studied; however, tax avoidance remains a challenge.

Design/methodology/approach

SSB characteristics, based on resource dependence theory, influence tax avoidance, including SSB size, educational level, expertise, reputation, remuneration and turnover. The samples were obtained from Islamic banks in Indonesia and Malaysia (2010–2020) using the data panel method.

Findings

Islamic banks avoid taxes through the effective tax rate and book tax difference. SSBs who have more expertise play a role in investigating the complexity of tax avoidance, and SSB reputation, who is a member of the Islamic bank regulator, understands immorality, resulting in reduced tax avoidance. Moreover, the recruitment system has been effective, as SSBs with more expertise have become more prevalent. Meanwhile, SSB from a Shari’ah background works only in regulated areas, simplifying Shari’ah compliance, in particular, attestation of financial reporting. A heavy workload is created by cross-membership, resulting in the neglect of the immoral value of tax avoidance. The calculation of tax avoidance also includes remuneration and bank assets.

Practical implications

Given the uniqueness of Islamic banks contributing to social welfare, tax regulators need to review the appropriateness of fees that can be treated as taxes. Tax regulators can join hands with Islamic bank regulators on this review.

Originality/value

To the best of the authors’ knowledge, this study is one of the first to examine the characteristics of SSBs and Islamic banks on tax avoidance. Separating Islamic banks by country enriches the analysis.

Details

Journal of Financial Crime, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1359-0790

Keywords

Article
Publication date: 27 April 2022

Justin Jin, Yi Liu, Zehua Zhang and Ran Zhao

The purpose of this paper is to investigate whether and how banks’ financial constraints affect their cash tax avoidance. The authors hypothesize that banks engage in more…

Abstract

Purpose

The purpose of this paper is to investigate whether and how banks’ financial constraints affect their cash tax avoidance. The authors hypothesize that banks engage in more tax planning to generate additional cash to mitigate their financial constraints.

Design/methodology/approach

The authors use a sample of US banks to conduct the panel regression analysis. The authors measure the bank tax avoidance using the cash effective tax rate and measure the bank financial constraints using the Z-score and annual payout ratio. The authors further use the implementation of the Dodd–Frank Act as a quasi-natural experiment to conduct the difference-in-difference analysis.

Findings

The authors document that financially constrained banks exhibit lower cash effective tax rates. The authors further show that banks facing greater financial constraints are less likely to pursue tax-saving activities following the Dodd–Frank Act. Moreover, the authors find that non-performing loans increase the influence of financial constraints on tax avoidance, while a financial crisis amplifies the impact of financial constraints on bank cash tax savings.

Originality/value

By extending previous research on financial constraints and tax planning, this paper is the first study to recognize financial constraints, along with the Dodd–Frank Act, as determinants of banks’ tax avoidance. This study informs policymakers about the regulation of tax avoidance in the banking industry and sheds light on possible future research on banks’ tax-planning strategies.

Details

Review of Accounting and Finance, vol. 21 no. 3
Type: Research Article
ISSN: 1475-7702

Keywords

Book part
Publication date: 19 October 2020

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…

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.

Article
Publication date: 22 March 2022

Haiping Zhao, Shengli Deng, Yong Liu, Sudi Xia, Eric Tze Kuan Lim and Chee-Wee Tan

Drawing on the Health Belief Model (HBM), this study aims to investigate the roles of health beliefs (i.e. perceived susceptibility, perceived severity, perceived…

Abstract

Purpose

Drawing on the Health Belief Model (HBM), this study aims to investigate the roles of health beliefs (i.e. perceived susceptibility, perceived severity, perceived benefits, perceived barriers, health self-efficacy and cues to action) in promoting college students’ smartphone avoidance intention.

Design/methodology/approach

Empirical data were collected through a cross-sectional survey questionnaire administered to 4,670 student smartphone users at a large university located in Central China. Further, a two-step Structural Equation Modeling was conducted using AMOS 22.0 software to test the hypothesized relationships in the research model.

Findings

Analytical results indicate that (1) perceived susceptibility, perceived severity, perceived benefits and health self-efficacy positively influence users’ smartphone avoidance intention; (2) perceived barriers negatively influence smartphone avoidance intention, while (3) cues to action reinforce the relationships between perceived susceptibility/perceived benefits and smartphone avoidance intention, but attenuate the relationships between perceived barriers/health self-efficacy and smartphone avoidance intention.

Research limitations/implications

This study demonstrates that HBM is invaluable in explaining and promoting users’ smartphone avoidance intention, thereby extending extant literature on both HBM and smartphone avoidance.

Originality/value

Research on smartphone avoidance is still in a nascent stage. This study contributes to the field by offering a fresh theoretical lens for pursuing this line of inquiry together with robust empirical evidence.

Details

Industrial Management & Data Systems, vol. 122 no. 4
Type: Research Article
ISSN: 0263-5577

Keywords

Article
Publication date: 8 March 2022

Lassaad Abdelmoula, Salim Chouaibi and Jamel Chouaibi

The purpose of this study is to examine the effect of business ethics and governance score on tax avoidance.

Abstract

Purpose

The purpose of this study is to examine the effect of business ethics and governance score on tax avoidance.

Design/methodology/approach

The sample used consists of 432 European companies belonging to the STOXX600 index during the period ranging from 2010 to 2019. The authors use the linear regression with a panel data.

Findings

The results show a negative and significant relationship between business ethics and tax avoidance. In addition, the governance is negatively and significantly correlated with tax avoidance. Similarly, this paper finds a negative and significant joint impact of business ethics and governance score on tax avoidance.

Practical implications

The findings of this paper could help firms consider their future growth opportunities in a context where the approach of business ethics occupies a central position in the business valuation.

Originality/value

This study is motivated by the low number of works in the context of the tax avoidance. It makes an important contribution to the academic literature through adding to the limited body of research on business ethics and governance score in a company setting. The firms strongly focusing on ethics and governance score are more likely to reduce their tax avoidance activities. Thus, these corporations aim to preserve their reputation and image. In this regard, it is worth saying that a positive reputation can increase the shareholder value. Accordingly, companies find a powerful strategy in their commitment and their ethical and responsible behavior, allowing them to maintain their good image and reputation.

Details

International Journal of Ethics and Systems, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2514-9369

Keywords

Book part
Publication date: 18 September 2017

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…

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.

Details

Advances in Taxation
Type: Book
ISBN: 978-1-78714-524-5

Keywords

Open Access
Article
Publication date: 10 March 2022

Chen Chai, Ziyao Zhou, Weiru Yin, David S. Hurwitz and Siyang Zhang

The presentation of in-vehicle warnings information at risky driving scenarios is aimed to improve the collision avoidance ability of drivers. Existing studies have found…

Abstract

Purpose

The presentation of in-vehicle warnings information at risky driving scenarios is aimed to improve the collision avoidance ability of drivers. Existing studies have found that driver’s collision avoidance performance is affected by both warning information and driver’s workload. However, whether moderation and mediation effects exist among warning information, driver’s cognition, behavior and risky avoidance performance is unclear.

Design/methodology/approach

This purpose of this study is to examine whether the warning information type modifies the relationship between the forward collision risk and collision avoidance behavior. A driving simulator experiment was conducted with waring and command information.

Findings

Results of 30 participants indicated that command information improves collision avoidance behavior more than notification warning under the forward collision risky driving scenario. The primary reason for this is that collision avoidance behavior can be negatively affected by the forward collision risk. At the same time, command information can weaken this negative effect. Moreover, improved collision avoidance behavior can be achieved through increasing drivers’ mental workload.

Practical implications

The proposed model provides a comprehensive understanding of the factors influencing collision avoidance behavior, thus contributing to improved in-vehicle information system design.

Originality/value

The significant moderation effects evoke the fact that information types and mental workloads are critical in improving drivers’ collision avoidance ability. Through further calibration with larger sample size, the proposed structural model can be used to predict the effect of in-vehicle warnings in different risky driving scenarios.

Details

Journal of Intelligent and Connected Vehicles, vol. 5 no. 2
Type: Research Article
ISSN: 2399-9802

Keywords

Book part
Publication date: 22 November 2017

Duane Windsor

This chapter examines the ethics and business diplomacy of legal tax avoidance by multinational enterprises (MNEs).

Abstract

Purpose

This chapter examines the ethics and business diplomacy of legal tax avoidance by multinational enterprises (MNEs).

Design/methodology/approach

The methodology assembles the relevant literature and examines alternative interpretations of corporate tax strategy. Key topics include business ethics and responsibility, business sustainability, economic patriotism and corporate inversions, tax havens, and possible solutions.

Findings

The debate concerns whether legal tax avoidance is unethical and/or poor business diplomacy. There are three possible strategies for MNEs. One strategy is intentional tax avoidance. Another strategy is business–government negotiation concerning tax liability. Another strategy is business diplomacy aimed at maximizing the social legitimacy of the firm across multiple national tax jurisdictions.

Social implications

The chapter assesses four possible solutions for corporate tax avoidance. One solution is voluntary tax payments beyond legal obligations whether out of a sense of ethics or a strategy of business diplomacy. A second solution is international tax cooperation and tax harmonization in ways that minimize opportunities for tax avoidance. A third solution is increased stakeholder pressure emphasizing business diplomacy and tax cooperation and harmonization. The fourth solution is negotiated tax liabilities between each business and each jurisdiction.

Originality/value

The chapter provides an original systematic survey of the key aspects of corporate international tax avoidance in an approach in which business ethics and business diplomacy are better integrated. The value of the chapter is that it provides information and assembles relevant literature concerning corporate international tax avoidance, and addresses possible solutions for this problem.

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