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Open Access
Article
Publication date: 18 August 2022

Fadoua Toumi, Mohamed Amine Bouraoui and Hichem Khlif

This paper aims to study the effect of Hofstede’s cultural dimensions (power distance, individualism, masculinity, uncertainty avoidance and long-term orientation) on corporate…

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Abstract

Purpose

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.

Design/methodology/approach

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.

Findings

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.

Originality/value

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.

Details

Arab Gulf Journal of Scientific Research, vol. 40 no. 2
Type: Research Article
ISSN: 1985-9899

Keywords

Article
Publication date: 12 July 2022

Fadoua Toumi, Hichem Khlif and Imen Khelil

This study aims to investigate the effect of national culture (power distance, individualism, masculinity, uncertainty avoidance and long-term orientation) on audit report lag.

Abstract

Purpose

This study aims to investigate the effect of national culture (power distance, individualism, masculinity, uncertainty avoidance and long-term orientation) on audit report lag.

Design/methodology/approach

The authors use two econometric approaches (ordinary least squares (OLS) and quantile regression) using STATA software for a sample of 1,208 firm-year observations over the period of 2017–2018.

Findings

Using Hofstede’s (2001) cultural dimensions (power distance, individualism, masculinity, uncertainty avoidance and long-term orientation), the authors find that masculinity and long-term orientation are positively associated with audit report lag, while uncertainty avoidance is negatively associated with the same variable. Quantile regressions suggest that the adverse effect of masculinity on audit report lag is more prevailing for companies communicating companies' annual reports in a timely manner. Furthermore, the positive association between power distance and audit report lag exists only under tardy disclosure regime. Quantile regressions also confirm that the negative (positive) effect of uncertainty avoidance (long-term orientation) on audit report lag is maintained under different timely disclosure regime. Additional analysis conducted with respect to legal system shows that individualism becomes a significant predictor of audit delays with a significant negative effect for common law countries, while uncertainty avoidance has a positive effect on the same variable in civil law countries characterized by high level of discretion and secrecy.

Practical implications

The results of this study suggest that national culture as an informal institution may complement formal institutions (e.g. financial markets) in promoting timely disclosure. For instance, foreign investors may view high uncertainty avoidance scores, in common law emerging economies, as an indicator of transparency and timely disclosure.

Originality/value

This study adds to the extant literature a further understanding of the impact of cultural dimensions on timely disclosure, as proxied by, audit report lag. The use of quantile regression approach shows how different timely disclosure regime may affect the association between masculinity, power distance and audit report lag.

Details

Journal of Economic and Administrative Sciences, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1026-4116

Keywords

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