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This paper aims to investigate the economic consequence of the tax reductive strategy on stock price. The authors’ theory, empirically reinforced, suggests managerial tax aggressiveness endangers the corporation through a heightened risk in stock price crashing. Information opacity worsens the situation by reinforcing the relationship. Policymakers should emphasize two aspects: market openness and tighter institutional monitoring. The evidence shown in this paper demonstrates that these two weaken the tax aggressiveness impact on risk of a crashing stock price.

The sample in this paper consists of 9,702 observations from listed firms from 2008 to 2013 in China. The tax rate is manually collected and all the other original data used in this study are sourced from Wind and China Capital Market and Accounting Research databases. Both logistic regression and ordinary least squares regression methods are used to test the hypothesis in this paper.

One key insight is in tax aggressiveness to be strongly correlated with a greater risk of future stock price crashing. The authors also found information opacity to exert a positive moderating effect. That is, the higher the information opacity, the stronger and more positive the correlation between tax aggression and stock price crash risk. However, the market process and an institutional investor have opposite, negative impacts. An open market environment reduces their correlativeness. Similarly, stronger institutional vigilance leads to an attenuation of such a co-relationship.

The findings of this paper have wide policy implications for management and control by authorities of listed corporations. Aggressiveness in management of corporate taxes accentuates the risks borne by stockholders. If so, internally within the corporation, such aggression shown by management, if not proscribed, could be subject to scrutiny, possibly by an independent committee. Externally, this may be countered by the authority in emphasizing three key factors: openness in information sharing, the market environment and tighter institutional monitoring.

This study provides a consequential theory of aggressive management of tax, rigorously analyzed and strongly, empirically supported. Overall, aggressiveness in tax management is related with assumption of higher risks in the crashing of stock price. The relationship is enhanced through information opacity, but reduced via market environment and institutional monitoring.

The purpose of this study is to examine the impact of internal and external corporate governance mechanisms on the probability of engaging in tax aggressiveness.

This study uses a sample of 52 firms listed on the Tunis stock exchange observed over the 2003–2016 period (The authors had to stop sampling in 2016 because the measurement of tax aggressiveness requires 4 years after the year of study. Therefore, the data on the measurement of tax aggressiveness were collected until 2020). This paper uses the logistic regression technique.

The results of the first logistic regression show that ownership structure and the supervision role of the tax authorities are determining factors that explain tax aggressiveness; while, the attributes of the board of directors does not seem to explain the probability of engaging in aggressive tax strategies. To further probe this question, the authors carried out additional analyses that examine the moderating effect of controlling shareholders on the relationship between the attributes of the board and tax aggressiveness. The results of our additional regressions indicate that the effect of these attributes improves in cases of non-presence of a controlling shareholder. This implies that the role that the board of directors can play in controlling management is possibly conditioned by the presence or no of control block holders.

The major limitation of this study is that it concentrates only on Tunisian listed companies because they are the only companies the financial statements of which are publicly available in Tunisia. Although the sample is relatively small due to the problem of data availability, it appears to be satisfactory given the 15-year sampling period (i.e. from 2003 to 2016).

The results of the study may help Tunisian regulators create requirements for corporate governance (such as the size of the board of directors and audit committee or the concentration of ownership). Moreover, this study not only focuses on the effect of corporate governance mechanisms on tax aggressiveness but also provides shareholders with information on the governance mechanisms to which they should pay more attention in their desire to obtain more efficient tax results.

The findings are also useful for tax policymakers seeking to identify the circumstances that give rise to an increased risk of tax aggressiveness, as tax aggressive behavior and the resulting non-payment of taxes also have societal implications. In fact, taxes also play an important role in financing the provision of public goods, making corporation tax a matter of public concern.

The present study differs from others in the existing literature by designing a more precise measure of tax aggressiveness and examining the interaction between two internal governance mechanisms; the presence of a controlling shareholder and the attributes of the board of directors. This study also examines the impact of the control exercised by the tax authorities on the behavior of firms in terms of tax aggressiveness.

Prior research has identified a number of variables that influence tax professionals’ judgments. However, these variables have usually been examined in isolation. This study has two main findings. First, using a structured questionnaire that allows for the collection of variables related to actual tax planning engagements, this study validates the findings of numerous laboratory studies using factor and regression analysis. Factors representing risks and rewards associated with the client and the IRS, along with task characteristics and client aggressiveness significantly affect the aggressiveness of tax advice given to clients. Second, tax professionals do not appear to charge a premium for aggressive tax advice. However, regarding the fee charged, a significant gender effect is found even after controlling for time spent on the engagement, experience, firm size and education.

This study aims to analyze the relationship between a company’s use of aggressive tax planning and several audit committee members’ characteristics, namely, independence, expertise, diligence and gender diversity.

This paper is an empirical research using archival data from 289 Canadian listed companies for the 2011-2015 period.

The authors find that measures of expertise and diligence are significantly related to tax aggressiveness. Financial expertise and tenure on the audit committee play an important role in constraining tax aggressiveness, as does having a larger audit committee.

One limitation – and an area for future research – is that the effects of the audit committee members’ relationships with managers of the firms were not investigated.

Knowledge of audit committee characteristics may send a signal to shareholders, investors and tax agencies regarding the company’s potential risk with respect to aggressive tax planning. The analysis provides useful insights for board governance committees when determining the profile of persons to nominate for board positions and committees. In discussing tax-risk management, the study may heighten audit committee members’ awareness of their role in this respect.

This study’s results indicate that even in a setting where incentives for firms to be tax-aggressive is low compared to high-tax rate countries, there is variability in firms’ tax aggressiveness. This situation allows us to find audit committee characteristics that are effective in decreasing tax aggressiveness.

The purpose of this paper is to analyse the relationships between company business strategy type and tax aggressiveness for companies listed on the Brazilian Bovespa stock exchange.

Following the concepts of Miles and Snow (1978, 2003), we classified company strategies into four types, analyser, defender, prospector and reactor, using data from 2012 to 2016. The authors excluded financial companies due to a differential tax regime. Next, prospector and defender companies were identified, and the relationship of these strategies with tax aggressiveness assessed using regression analysis; analyser and reactor types were not included as these are defined as a combination of the prospector and defender type, or non-strategic, respectively. To assess aggressiveness, the authors used effective tax rates on corporate profits, as well as a metric that captures tax burden in terms of all taxes paid by a company.

Most Brazilian companies were analysers (76.66 per cent), with prospector companies being a minority, and defenders representing a little over 21 per cent. Unlike the findings of Higgins et al. (2015), the authors found that defender companies also have a tendency to practice aggressive tax planning.

The authors found the Brazilian defender companies similar to prospectors, tended to be more tax aggressive or to take higher tax risks. Thus, findings in economies such as the USA may not be generalizable to other countries, such as Brazil, Russia, India or China (i.e. the BRICs), for example. The particularities of each country, such as ease of access to the capital market, tax deductibility of investment in research and development and legal issues must be considered before applying generalized prognostics.

This paper offers original empirical evidence from Brazil of the relationship between company strategy type and the tax aggressiveness, offering a clear result that differs in part from results from American companies. It therefore encourages further studies on this topic.

This chapter investigates the effect of moral reasoning of tax professionals on the aggressiveness of their reporting recommendations. The findings of the study indicate moral reasoning influences the aggressiveness of tax reporting decisions separate from the influence of client pressure. As the level of moral reasoning increases, the aggressiveness of the reporting position is found to0 decrease. Contrary to prior research, client pressure is not related to tax reporting aggressiveness. Failure to observe this relationship may signal a shift in behavior resulting from the intense public and regulatory scrutiny at the time of data collection which was in the immediate aftermath of the Enron scandal.

This study aims to examine the consequences of tax authorities’ use of concession-timing negotiation strategies on tax practitioners and their final proposed offers.

This is an experimental study conducted on tax practitioners using a design of 2 × 1, varying the tax authorities’ negotiation strategy (i.e. concession-gradual and concession-end strategies) across two levels.

The concessionary negotiation strategies adopted by tax authorities influence tax practitioners’ final proposed offers, their perceptions of fairness (i.e. distributive justice and procedural justice) and their aggressiveness of stance in tax audit negotiations.

This experimental study contributes to existing research on tax authority-tax practitioner negotiation models used during tax audits by providing the first evidence that concession timing matters. The study extends the negotiation model to include tax aggressiveness as a new variable and examines the indirect roles of fairness and offers in tax audit negotiations.

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.

We investigate how different cognitive conceptualizations of reference point and tax withholdings jointly influence aggressive tax filing. We utilize a field study with responses captured from actual taxpayers immediately after filing their returns. Consistent with both prospect theory and mental accounting perspectives, we hypothesize and find evidence that more aggressive filing decisions depend on mental categorization of whether taxpayers expect a tax refund or owe additional taxes relative to their expected asset position (EAP). We find a joint and additive impact of EAP with a cognitive link made between taxes and the categorization of amounts owed. Our findings suggest that more aggressive filing behavior is found in taxpayers in a tax loss position relative to their EAP and in those that do not separately categorize taxes owing from their own resources. By highlighting the importance of EAP and the cognitive separation of taxes owed, we provide insight for revenue agencies to use cognitive framing strategies to mitigate aggressive taxpayer behavior. The cognitive framing of EAP may be influenced by the use of installment payments and tax withholdings, but also may be affected by communications that alter taxpayers' expectations of taxes owed.

The purpose of this paper is to examine the motivations of earnings management and financial aggressiveness levels in the big 100 companies listed on the NASDAQ 100 after the 2007 financial crisis.

This paper uses two samples. The first contains 471 observations of 100 companies listed on the NASDAQ 100 for the period 2008-2012 and is used to examine the motivations of earnings management. The second represents 282 observations of companies listed on the NASDAQ 100 that use financial aggressiveness. The authors use a panel data model to analyze the effects of four explanatory variables (corporate governance structure, CEO compensation, CEO characteristics and audit fees) on both earnings management and financial aggressiveness levels.

The results of the investigation show the significant impact of corporate governance structure, CEO compensation, CEO characteristics and audit fees on reducing the earnings management and financial aggressiveness levels.

The findings can be valuable to both investors and researchers. For researchers, the present work may help in explaining the motivations of earnings management and financial aggressiveness practices used by large American firms after the 2007 US financial crisis. For investors, this study serves to highlight the critical importance of corporate governance, CEO compensation and CEO characteristics in limiting such behaviors. Thus, investors are recommended to account for such variables in order to make effective investment decisions. As an extension to this study, researchers might consider other CEO psychological variables. Other market indices could also be considered in order to generalize and validate the results of the research.

Investors must take into consideration the corporate governance structure and ask for supplementary information about CEO characteristics to ensure better investment decisions.

In this paper, and in contrast to previous research, the authors test the impact of corporate governance structure, CEO compensation, CEO characteristics and audit fees together on the level of both earnings management and financial aggressiveness behavior for large US non-financial firms after the 2007 financial crisis. The authors show that older CEOs use less earnings management and financial aggressiveness. The findings can be valuable to investors, managers and regulators because they have implications for their interactive decision-making process.