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1 – 2 of 2Akmalia Ariff, Wan Adibah Wan Ismail, Khairul Anuar Kamarudin and Mohd Taufik Mohd Suffian
This paper examines whether financial distress is associated with tax avoidance and whether the COVID-19 pandemic moderates such association.
Abstract
Purpose
This paper examines whether financial distress is associated with tax avoidance and whether the COVID-19 pandemic moderates such association.
Design/methodology/approach
The sample covers 38,958 firm-year observations from 32 countries during the period 2015–2020. Financial distress is measured using the ZSCORE by Altman (1968), while tax avoidance is based on the book-tax difference.
Findings
Financially distressed firms exhibit low tax avoidance pre- and during the pandemic periods. The authors find higher tax avoidance during the pandemic compared to the pre-pandemic period, but the pandemic enhances the negative relationship between financial distress and tax avoidance.
Research limitations/implications
The study offers evidence on how financial distress drives firms to engage in more tax avoidance when firms globally encountered various levels of financial difficulty sparked by the economic challenges of the COVID-19 pandemic.
Practical implications
The findings provide insights to policymakers on the need to monitor and incentivise financially distressed firms, especially during economic challenges due to pandemic.
Originality/value
This study adds to the limited, albeit important, evidence on the joint effect of the COVID-19 pandemic and financial distress on tax avoidance.
Details
Keywords
Iman Harymawan, Mohammad Nasih, Nadia Klarita Rahayu, Khairul Anuar Kamarudin and Wan Adibah Wan Ismail
This study aims to examine the relationship between CEO busyness and financial reporting quality in a country which implements a two-tier board system.
Abstract
Purpose
This study aims to examine the relationship between CEO busyness and financial reporting quality in a country which implements a two-tier board system.
Design/methodology/approach
This study includes firms listed on the Indonesian Stock Exchange during the 2010–2018 period. This study employs an ordinary least squares regression, the propensity score matching procedure, and a Heckman two-stage regression in testing the hypothesis.
Findings
This study finds that firms with busy directors have a higher financial reporting quality, and these results are robust to a battery or sensitivity analysis. The additional analyses also find that a busy CEO is negatively associated with the firm's financial reporting quality with decreasing income.
Practical implications
This paper provides implications for policy-makers in the emerging market on devising policies on CEOs' appointments, especially when involving multiple directorships. Despite the general belief on the detrimental workload effects of busy directors, this study offers evidence supporting the opposite effect.
Originality/value
As many previous studies focused on the effect of director busyness on firm’s performance, this study focusses on the effect of CEO busyness on financial reporting quality. To the best of our knowledge, this study is the first to investigate this issue in an emerging market.
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