Search results

1 – 5 of 5
To view the access options for this content please click here
Article

Mahfoudh Hussein Mgammal, Barjoyai Bardai and Ku Nor Izah Ku Ismail

This paper aims to examine the impact of corporate governance internal mechanisms on tax disclosure in non-financial firms in Malaysia. Managerial ownership and incentive…

Abstract

Purpose

This paper aims to examine the impact of corporate governance internal mechanisms on tax disclosure in non-financial firms in Malaysia. Managerial ownership and incentive compensation are used as proxies to reflect corporate governance conduct.

Design/methodology/approach

This study uses panel data set to analyse 286 non-financial listed companies on Bursa Malaysia for the years 2010-2012. Tax disclosure was gathered from the financial statements, particularly in the consolidated of tax expenses. Tax disclosure was measured using modified effective tax rate reconciling items. Multivariate statistical analyses were run on the sample data.

Findings

This study finds that managerial ownership and incentive compensation do not significantly influence tax disclosure. On the other hand, it is found that there are significant positive associations between each of firm size and industry dummy, and tax disclosure. This means that company-specific characteristics are important factors affecting corporate tax disclosure.

Research limitations/implications

This study extends the work of previous studies by suggesting that the signalling theory and the agency theory are the main theories concerned with tax disclosure and corporate governance. The authors add an additional appreciation of the contribution of corporate governance from the interested parties’ tax disclosure evaluation in the Malaysian environment.

Practical implications

The evidence found by this study has important policy and practical knowledge implications for the authorities, researchers, decisionmakers and firm managers. The findings provide them with some relevant insights on the importance of corporate governance practices from the companies’ perspectives and contribute to the discussion of who verifies and deduces from tax disclosure directed by companies.

Originality/value

To the best of the authors’ knowledge, this study is the first attempt to examine the influence of the corporate governance internal mechanisms on tax disclosure in a developing nation like Malaysia. Although this paper focuses on a single country, it contributes significantly to the debate about tax disclosure in relation to “comply or explain”, as suggested in the Code of Corporate Governance. This study shows that companies are trying to avoid as far as possible disclosing tax-related information.

Details

Corporate Governance: The International Journal of Business in Society, vol. 18 no. 5
Type: Research Article
ISSN: 1472-0701

Keywords

To view the access options for this content please click here
Article

Rohaya, Noor, Nor’Azam Mastuki and Barjoyai Bardai

This study investigates the gap between financial accounting income and taxable income (i.e. book‐tax difference) and the value relevance of corporate taxable income in…

Abstract

This study investigates the gap between financial accounting income and taxable income (i.e. book‐tax difference) and the value relevance of corporate taxable income in providing information on the quality of reported earnings for Malaysian listed firms during the tax years 2000 to 2004. The large gap between the financial accounting income and taxable income resulting from tax planning activities is reflected in firms’ effective tax rates (ETRs), a proxy for firms’ actual tax burdens. Thus, lower ETRs indicate high tax planning activities undertaken by the sample firms, and vice‐versa for firms with higher ETRs. This study uses a tax‐based earnings quality indicator, that is, the ratio of after‐tax taxable income to reported income (ATTI) to investigate the quality of corporate earnings. The study provides empirical evidence that firms report higher financial accounting income to shareholders and lower taxable income to tax authorities during the years 2000 to 2004. The significant and positive relation statistical results between firms’ after‐tax taxable income (ATTI) and market value of equity provided indicate the value relevance of taxable income as both an earnings quality indicator and a performance measure. Thus, the empirical results suggest investors appear to fully comprehend the quality‐related information in taxable income. This study concludes that first, tax planning activities contribute to a large gap between financial accounting income and taxable income; and second, taxable income contains useful information on the quality of reported earnings.

Details

Journal of Financial Reporting and Accounting, vol. 7 no. 2
Type: Research Article
ISSN: 1985-2517

Keywords

To view the access options for this content please click here
Article

Mahfoudh Hussein Mgammal

This paper aims to examine the impact of corporate tax planning (TP) on tax disclosure (TD). Using tax expenses data set, with the detailed effective tax rate (ETR) by…

Abstract

Purpose

This paper aims to examine the impact of corporate tax planning (TP) on tax disclosure (TD). Using tax expenses data set, with the detailed effective tax rate (ETR) by reconciling individual items of income and expenses.

Design/methodology/approach

A firm-level panel data set is used to analyse 286 non-financial listed companies on Bursa Malaysia that spans the period 2010-2012. Multivariate statistical analyses were run on the sample data. The empirical understanding of TD depends on public sources of data in the financial statement, characterized in the aggregated note of tax expenses. Fitting with Malaysian environment, the authors measured TD using modified ETR reconciling items.

Findings

Results show that TP, exhibit a robust positive influence on TD. This suggests that TP is related to lower corporate TD. In addition, companies with high TP attempt to mitigate the disclosure problem by increasing various TD. The authors further find significant positive impact between each of firm size and industry dummy, on TD. This means that company-specific characteristics are significant factors affecting corporate TD.

Research limitations/implications

This study contributes to the literature on the effect of TP on TD. It depends on both the signalling theory and the Scholes–Wolfson framework, which are the main theories concerned with TP and TD. Therefore, from a theoretical side, the authors add to the current theories by verifying that users are the party influenced whether positively or negatively, by the extent of TD or the extent of TP activities through Malaysian organizations.

Practical implications

The evidence found in this paper has important policy and practical implications for the authorities, researchers, decision makers and company managers. The findings can provide them some relevant insights on the importance of TP actions from companies’ perspective and contribute to the discussion of who verifies and deduces from TD directed by companies.

Originality/value

This paper originality is regarded as the first attempt to examine the impact of TP on TD in a developing country such as Malaysia. Malaysian setting is an interesting one to examine because Malaysia could be similar to other countries in Southeast Asia. Results contribute significant insights to the discussion about TD regarding, which parties are responsible for the verification of TD by firms, and which parties benefit from this disclosure. Findings suggest that companies face a trade-off between tax benefits and TD when selecting the type of their TP.

Details

Meditari Accountancy Research, vol. 28 no. 2
Type: Research Article
ISSN: 2049-372X

Keywords

To view the access options for this content please click here
Article

Mahfoudh Hussein Mgammal

The purpose of this study is to examine the impact of tax planning (TP), which measured by the component of tax saving (TS), namely, permanent differences (PDs), temporary…

Abstract

Purpose

The purpose of this study is to examine the impact of tax planning (TP), which measured by the component of tax saving (TS), namely, permanent differences (PDs), temporary differences (TDF), foreign tax rates (FTRs) differentials and tax losses (TLOS) on tax disclosure (TD).

Design/methodology/approach

This study uses panel data set from sample consisted of 286 non-financial listed companies in the main market of Bursa Malaysia (formerly known as Kuala Lumpur stock exchange) for three years 2010-2012. The empirical understanding of TD depends on publicly source of data in the financial statement, characterized in the aggregated note of tax expenses. TD was measured using modified effective tax rate reconciling items, as it is appropriate in the Malaysian environment. The paper uses multivariate statistical analyses on this sample.

Findings

The empirical results of the multivariate regressions indicated that TD exhibits significant positive association with the TLOS component of TS but has significant negative relationship related to the PDs component of TS and TDFs component of TS.

Research limitations/implications

This study extends the prior-related literature by examining the relation between TD and component of TS. This study depends on both the signaling theory and the Scholes–Wolfson framework. These are the main theories concerned with TD and TP (TSs), respectively. Therefore, from a theoretical side, the authors adds to the current theories by verifying that users are the party influenced whether positively or negatively, by the extent of TD or the extent of activities of TP through Malaysian organizations.

Practical implications

The evidence found by this study has important policy and practical knowledge implications for a minimum of three parties, namely, authorities, researchers in academic field and decision-makers and firm managers. The findings can provide them some relevant insights on the importance of TS actions from companies’ perspective and contribute to the discussion of who verifies and deduces from TD directed by companies.

Originality/value

This study is regarded as the first attempt to examine the impact of the component of TS, namely: PDs, TDFs, FTRs differentials and TLOS on TD in a developing nation such as Malaysia. In spite of this paper focuses on a single country, it contributes significant insights to the debate about TD.

Details

Pacific Accounting Review, vol. 31 no. 4
Type: Research Article
ISSN: 0114-0582

Keywords

To view the access options for this content please click here
Article

Majid Khan and Rahizah Binti Sulaiman

Research on corporate social responsibility (CSR) reporting highlights an increasing lack of transparency in the information reported along with concerns surrounding…

Abstract

Purpose

Research on corporate social responsibility (CSR) reporting highlights an increasing lack of transparency in the information reported along with concerns surrounding overall reporting practices. One area that needs exploration is how chief executive officers (CEOs) convey messages in relation to CSR. This paper aims to investigate the linkage between CEO’s statements (words and images) in relation to CSR and the performativity of such communication.

Design/methodology/approach

The study analysed CEOs statements from five Malaysian companies contained in 2016, 2017 and 2018 standalone sustainability and annual reports. The texts and visuals are analysed by using discourse analysis.

Findings

The findings uncover three main discourses (economic, environmental and social) along with other discourses (achievements and recognition and challenges). The texts and images are found to be lacking in clarity and consistency and in many ways leave the stakeholders to make their own conclusions about the reported information.

Originality/value

The research indicates that while the leaders can be more direct to their stakeholders, however, the opportunity is not always capitalised. Overall, the analysis suggests an increasing scientism in CEOs messaging in relation to CSR as a tool to enhance perceived accountability of the business. The study also suggests avenues for improvement. This paper contributes to the emergence of different types of discourses that are being upheld by CEOs in their statements on CSR in Malaysian context. The discourses identified provide interesting insights into how CSR is perceived by the leaders.

Details

Corporate Governance: The International Journal of Business in Society, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1472-0701

Keywords

1 – 5 of 5