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This paper aims to study the effect of Hofstede’s cultural dimensions (power distance, individualism, masculinity, uncertainty avoidance and long-term orientation) on corporate tax avoidance as proxied by the effective tax rate.

A sample of 944 observations during 2016 was analyzed at three different quantiles (Q 0.25, Q 0.50 and Q 0.75) based on a quantile regression approach.

Using Hofstede’s (2001) cultural dimensions (power distance, individualism, masculinity, uncertainty avoidance and long-term orientation), the authors find that individualism and masculinity are negatively associated with effective tax rates, and this negative relationship is more pronounced under low tax aggressiveness regime (third quantile). By contrast, long-term orientation is positively associated with the effective tax rate, and this relationship is more prevailing under aggressive tax regime (first quantile). These findings remain stable when using cash effective tax rate as an alternative measure for tax avoidance.

This study adds to the extant literature a further understanding of the impact of cultural dimensions on tax avoidance. The use of quantile regression approach shows how the effect of masculinity, individualism and long-term orientation on tax avoidance varies under different tax management regimes.

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.

The purpose of this paper is to test the economic theory that product market competition should enhance firm performance in the US corporate tax management setting. It identifies one mechanism through which corporate management can improve firm performance. The paper also identifies business conditions that may facility or impede effective corporate tax management.

The paper tests the relationship between product market competition and corporate tax efficiency using large archival data. The primary data source is COMPUSTAT, which contains annual and quarterly accounting data for US public firms. Other data sources include accounting comparability data generously shared by Professor Vedi.

The paper finds that firms in competitive industries are more efficient in managing taxes. Specifically, the paper documents that firms in competitive industries exhibit lower effective tax rates than their non-competitive counterparts. Furthermore, the paper finds that the positive link between competition and the efficiency of tax management is much stronger for firms with lower cash flow volatility and for firms with fewer industry investment opportunities. The lack of financial statement comparability may weaken this link.

Tax laws vary greatly from country to country. Readers should interpret the results within the US tax environments.

Results in this paper have implications for multinational corporations that are interested in investing and doing business in the USA.

This paper sheds light on how competition influences firm performance through efficient tax management, a specific mechanism through which competition improves firm performance. To the best of the author’s knowledge, this study provides the first documentation of how product market competition affects tax planning for US publicly traded companies.

The purpose of this paper is to examine the association between political connections and tax avoidance in Islamic banking industry and to test whether joint audit affects this relationship.

Tax avoidance is measured using effective tax rate while political connections represent an indicator variable that equals 1 if a bank has at least one politically connected director on the board of directors and zero otherwise.

This study documents that political connections are negatively associated with effective tax rate, while joint audit is positively related to the same variable. We also find that the negative association between political connections and effective tax rate becomes insignificant for joint-audited banks, while it remains negative and significant for banks audited by one auditors.

The findings of this study have policy implications for banking industry because joint audit reduces the adverse effect of political connections on tax avoidance.

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.

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.

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.

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.

This study examines the association between geopolitical risk (GPR) and corporate tax, which is a major source of revenue for the government and a significant explicit cost for firms. The authors use a comprehensive measure of GPR to study its effects on corporate taxes by using an international sample.

The authors adopt the geopolitical measure constructed by Caldara and Iacoviello (2022) as a proxy for GPR and cash-effective tax rate benchmarked with statutory tax rate to measure corporate tax avoidance. The authors employ panel regression with fixed effects (FEs) to investigate the impact of GPR on corporate tax avoidance. The authors also conduct a battery of robustness tests to ensure the strength of the study’s results.

This study’s empirical results indicate that sample firms increase their tax avoidance amid increasing GPR. Further analyses show that financial constraints incentivize firms to avoid taxes during rising geopolitical tensions. The authors also provide evidence on the role of firm-level and country-level governance in weakening the association between GPR and tax avoidance.

Policymakers and governments may strengthen the enforcement rule to limit aggressive tax practices of corporates during GPR to balance fiscal deficit. In addition, this study sheds light on the debate among administrators and politicians over the efficacy of current tax laws and governance structures in the presence of heightened GPR.

The authors extend the literature on GPR by analyzing its effect on corporate tax avoidance. Unlike existing single-country studies, the authors use a cross-country setup to investigate the impact of GPR on tax avoidance, making this study’s results more generalizable as the authors control for a host of country, industry, and time factors. Apart from political uncertainty, terrorism, and climatic issues, the authors document GPR as a strong macroeconomic driver of corporate tax avoidance. The authors make a new contribution to the literature on the moderating role of governance and institutional factors on the association between tax avoidance and GPR in an international context. The authors also contribute to the literature on macroeconomic determinants of tax avoidance.

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

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.

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.

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.

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.

This study aims to examine the impact of the COVID-19 pandemic on corporate tax avoidance (TA).

This study used a panel data set of US publicly traded firms listed in the Standard & Poor 500 index. Based on available information in the DATASTREAM database covering the 2019–2021 period, three proxies for TA are used, namely the current effective tax rate (CUETR), the cash effective tax rate and book-tax differences (BTD). Multiple regression models including industry and year fixed effects are estimated. Additional analyses are performed using BTD components i.e. temporary and permanent BTD, and testing the impact of the COVID-19 pandemic across industries.

The results show that the outbreak of the novel coronavirus (COVID-19) affected positively the CUETRs and negatively BTD, indicating a reduction in TA, in the postpandemic period. Further analyses provide evidence that this effect is the same, regardless of the degree of industry failure probability, but it is more driven by the reduction of deferred tax expenses (temporary BTD component). These findings suggest that the US publicly listed firms have experienced a serious drop in their income in the postpandemic period, following the markets closure and the quarantine periods that hampered business. Therefore, with lower profits, they are not willing to evade taxes.

This paper enriches taxation research during economic crises. The research findings have important policy implications. On the one hand, the fiscal policy should stimulate growth to allow firms to tackle the challenges they confronted post-COVID-19. On the other hand, the global economic crisis caused by the pandemic has led to a major deterioration in public finances and has raised inequalities across households. Therefore, it would be necessary to review public fiscal policies to achieve a balance of equity, growth and sustainability. In this context, tax reform focusing on tax progressivity could counter in part the negative economic effects of the COVID-19 pandemic and led to economy recovery.

This study contributes to the growing body of literature on the COVID-19 effects with a special focus on corporate practices. This study provides first evidence on the effect of the COVID-19 pandemic on manager’s behavior from taxation perspective. This study also enriches taxation research during economic crises.

This study aims to investigate the moderating effect of equity-based compensation on the sources of book-tax differences. The authors investigate whether equity-based compensation affects the association between book-tax differences and tax planning, and the association between book-tax differences and earnings management.

The authors use a sample of 9,024 firm-year observations (913 firms) spanning the period 1992-2011, obtained from ExecuComp and Compustat. They estimate cross-sectional regressions of the proxy for tax planning, discretionary accruals and their interactions with equity-based compensation on book-tax differences.

The authors find that tax planning-related book-tax differences increase as the equity-based pay of executives does, and that earnings management-related book-tax differences decrease as the equity-based pay of executives increases. The results are robust across three alternative measures of tax planning.

Equity-based compensation plays an important role in managerial discretion on tax planning and earnings management. The findings suggest that, although equity incentives promote a high level of both tax planning and earnings management, they motivate managers to constrain the level of earnings management to avoid larger book-tax differences.

This paper focused on financial constraints scenario and tax planning activities of banks in Ghana. The study explores how financial constraints could motivate the banks to pursue tax planning mechanism and the implication on tax revenue mobilisation.

The paper followed generalised method of moments and fixed effect estimators to investigate the financial constrained-tax planning activity nexus. Simulation approach is adopted to provide financially constrained bank scenario. Besides contemporaneous analysis, sensitivity analysis is conducted to determine time varying effect. Data from all the 20 commercial banks which have operated from 2008 to 2018 were used.

The paper found that when banks are faced with financial constraints, they exhibit lower cash-effective-tax-rate. The decomposition analysis also revealed that financially constrained banks are likely to take on both short- and long-term tax planning opportunities. The paper also found evidence of persistence in the tax planning activities under financial constrained scenario.

This paper is one of the few studies which have extended the tax planning literature to the Ghanaian banking sector. Further novelty is seen from the development of financial constraint scenario from liquidity and solvency. Liquidity and solvency are the anchors for continuity of banking operation and sensitive to regulatory watch and sanctions. Therefore, by applying simulation approach to trigger financial constraints scenarios from these fundamental indicators reveals the extent to which commercial banks rely on tax planning opportunities to mitigate the consequence of financial constraints.