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This chapter proposes that tax education, proxied by Master of Science in Taxation (MST) degree, has substantial influence on chief financial officers’ (CFOs) knowledge, skill sets, values, and cognitive preferences and further influences their decisions in tax reporting. By empirically examining the relation between CFOs with MST degree and their companies' tax compliance based on US data between 2004 and 2016, we find that CFOs with MST degree are associated with improved tax compliance, suggesting that US MST education, beyond general accounting education, cultivates graduates with higher levels of professionalism and ethics in the field of taxation. Moreover, we find that CFOs' tenure, age, and compensation influence the relation between tax education and tax compliance, suggesting company's compensation and employee policies influence executives' tax decisions. Finally, we find that pressures from financial reporting and CEOs with accounting educational background could alleviate the role of CFOs with accounting educational background in tax reporting, while institutional owners could strengthen the role of CFOs. This chapter provides evidence regarding the social implication of MST program and has important managerial implication to tax compliance, executive recruitment, and corporate governance.

This study aims to examine whether tax avoidance is associated with overinvestment and the moderating role of financial reporting quality on such association in Italian private firms.

This study uses a multivariate regression analysis based on a sample consisting of 65,535 firm-year observations between 2015 and 2022.

Results show that tax avoidance is positively associated with overinvestment and that such relation is weaker for firms with a higher financial reporting quality than for firms with a lower financial reporting quality. Furthermore, findings hold to a wide range of robustness checks, including alternative measures of main variables, endogeneity and falsification tests.

Since this study focuses on the Italian private firms, the results cannot be extensively generalized.

As this study highlights the importance of tax avoidance on overinvestment, it can be particularly beneficial for managers, policymakers and other parties interested in assessing factors that lead to a capital allocation in less efficient investments.

This study provides novel evidence about the role of tax avoidance on overinvestment in private firms by mitigating the little attention of prior research in this area. It examines the Italian setting that is particularly of interest given the relevance of private firms in such context and the incentives of managers to reduce the tax burden.

This study aims to focus on the five most relevant and discursive emerging technologies in accounting (cloud computing, big data and data analytics, blockchain, artificial intelligence (AI) and robotics process automation [RPA]). It investigates the adoption and use of these technologies based on data collected from accounting professionals in a technology-developed country – Canada, through a survey.

The study investigates the adoption and use of emerging technologies based on data collected from accounting professionals in a technology-developed country – Canada, through a survey. This study considers the said nature and characteristics of emerging technologies and proposes a model using the factors that have been found to be significant and most commonly investigated by existing prior technology-organization-environment (TOE)-related technology adoption studies. This survey applies the TOE framework and examines the influence of significant and most commonly known factors on Canadian firms’ intention to adopt the said emerging technologies.

Study results indicate that Canadian accounting professionals’ self-assessed knowledge (about these emerging technologies) is more theoretical than operational. Cloud computing is highly used by Canadian firms, while the use of other technologies, particularly blockchain and RPA, is reportedly low. However, firms’ intention about the future adoption of these technologies seems positive. Study results reveal that only the relative advantage and top management commitment are found to be significant considerations influencing the adoption intention.

Study findings confirm some results presented in earlier studies but provide additional insights from a new perspective, that of accounting professionals in Canada. The first limitation relates to the respondents. Although accounting professionals provided valuable insights, their responses are personal views and do not necessarily represent the views of other professionals within the same firm or the official position of their accounting departments or firms. Therefore, the exclusion of diverse viewpoints from the same firm might have negatively impacted the results of this study. Second, this study sample is limited to Canada-based firms, which means that the study reflects only the situation in that country. Third, considering the research method and the limit on the number of questions the authors could ask, respondents were only asked to rate the impact of these five technologies on the accounting field and to clarify which technologies are used.

This study’s findings confirm that the organizational intention to adopt new technology is not primarily based on the characteristics of the technology. In the case of emerging technology adoption, the decision also depends upon other factors related to the internal organization. Furthermore, although this study found no support for the effect of environmental factors, it fills a gap in the literature by including the factor of vendor support, which has received little attention in prior information technology (IT)/ information system (IS) adoption research. Moreover, in contrast to most prior adoption studies, this study elaborates on accounting professionals’ experience and perceptions in investigating the organizational adoption and use of emerging technologies. Thus, the findings of this study are valuable, providing insights from a new perspective, that of professional accountants.

The study findings may serve as a guide for researchers, practitioners, firms and other stakeholders, particularly technology providers, interested in learning about emerging technologies’ adoption and use in Canada and/or in a relevant context. Contrary to most prior adoption studies, this study elaborates on accounting professionals’ experience and perceptions in investigating the organizational adoption and use of emerging technologies. Thus, the findings of this study are valuable, providing insights from a new perspective, that of professional accountants.

The study provides insights into the said technologies’ actual adoption and improves the awareness of firms and stakeholders to the effect of some constructs that influence the adoption of these emerging technologies in accounting.

We examine why Cash ETRs of US domestic firms have decreased over time. Using samples from two periods – an early period (1994–1998) and a late period (2011–2015) – we regress Cash ETRs in each period on a set of explanatory variables, and allow coefficients to differ across time periods. We find that, when coefficients are allowed to differ, there is no longer a decline in the unexplained portion of Cash ETR across the two periods, and that the previously observed decline is associated with a change in the relation between firm size and Cash ETR between the two periods. Further analysis suggests that the coefficient on firm size has been declining over the past 20 years, and that controlling for this time trend alone is sufficient to explain the declining trend in Cash ETRs for domestic firms.

The purpose of this paper is to investigate the relationship between tax avoidance and earnings persistence in the light of a developing economy, with the main focus on China.

In the analysis, the author conducts a survey on the tax avoidance situation of Chinese listed companies from 2012 to 2020. Then, a multivariate regression analysis is performed in order to analyse the relationship between corporate tax avoidance and earnings persistence.

The findings of the present study show that tax avoidance has a significant positive effect on earnings persistence. However, when the degree of tax avoidance is high, the “risk effect” of tax avoidance exceeds the “value effect”, and tax avoidance will reduce the persistence of earnings. This conclusion is even more prominent when the company is non-state-owned. Further research shows the increase of institutional investors’ shareholding ratio can improve “value effect” of tax avoidance, lessen “risk effect” of tax avoidance, and positively affect the relationship between tax avoidance and earnings persistence.

This study provides evidence for investors to understand the dual effect of tax avoidance on earnings persistence. The results may have implications for regulatory bodies. They can provide a better understanding of the corporate governance role of institutional investors in curbing opportunistic tax avoidance.

This study enriches the research on tax avoidance effects by analysing the impact of tax avoidance on earnings persistence. This study also compensates for the shortcomings of analysing earnings persistence mainly from the perspective of tax differences in the past, and promotes the study of the corporate governance effects of institutional investors under different levels of tax avoidance.

This study examines whether US effective tax rates on foreign income of US multinationals (MNCs) vary according to the favorability of US macroeconomic conditions relative to those of non-US countries. We use the pre-Tax Cuts and Jobs Act of 2017 regime as our setting and present evidence that US effective tax rates on foreign earnings are higher (lower) in periods when macroeconomic conditions in the US are favorable (unfavorable) relative to those elsewhere in the world. These results imply that firms seek to maximize after-tax returns when making asset allocation decisions, even when faced with US repatriation tax costs. We provide further evidence indicating that our primary results vary predictably according to certain firm characteristics, namely the ability to acquire funds for investment through less expensive means than repatriation of foreign profits, high intangible asset intensity, and tax aggressiveness. Finally, we show that economic uncertainty in the US counters the positive effects of favorable US macroeconomic conditions on US effective tax rates on foreign earnings. Our findings have implications for the policy debate around the US taxation of foreign earnings and provide a (partial) explanation for the observed lower-than-expected levels of repatriation activity following the implementation of the Tax Cuts and Jobs Act of 2017.

This study aims to examine the effect of audit firm tenure (AFT) on corporate tax avoidance (CTA) and the moderating effect of the COVID-19 pandemic.

The sample comprises 41,074 firm-year observations from 32 countries from 2015 to 2020, for which data are collected from various sources: financial data from the Refinitiv database, country corporate tax rates from the Tax Foundation, and other country-level data from the World Bank database. The authors use the book tax difference to measure CTA and multiple proxies for AFT.

This study finds that a longer AFT is associated with higher CTA, confirming the notion that long AFT impairs auditor independence. The findings remain robust when considering various AFT proxies, incorporating Hofstede’s cultural factors, using weighted least-squares estimation and addressing endogeneity through propensity score matching. This study also finds a non-linear relationship between extended client and auditor relationships and CTA, supporting the mandatory audit firm rotation regulation and increasing investors’ caution regarding the consequences of extended client–auditor relationships on firm behaviour.

This study offers new evidence on the effect of the COVID-19 pandemic on the link between AFT and CTA and documents a non-linear relationship between AFT, which has not been addressed in prior studies.

The findings of this study have several significant practical implications. First, governments and policymakers gain insights into the consequences of extended auditor–client relationships, hence calling for a review of auditing and taxation regulations. Second, the findings provide important insights into the issue of auditor independence, especially during long engagements and crises such as COVID-19. Finally, investors and tax authorities should be more cautious about the risks of aggressive tax avoidance during crisis periods.

To the best of the authors’ knowledge, this is the first study to use a global data set to investigate the effect of AFT on CTA during the COVID-19 pandemic.

This study explores the relationship between firm value and conforming tax avoidance (tax avoidance that does not create a book-tax difference). Tax avoidance provides firms with more cash and creates value. However, conforming tax avoidance has costs, such as lower book income, and these costs potentially lower firm value. As such, it is unclear whether conforming tax avoidance is positively or negatively correlated with firm value. We use a measure of conforming tax avoidance that was recently introduced in the literature, and bifurcate tax avoidance into conforming and nonconforming portions using a large sample. We present evidence that investors place a negative value on conforming tax avoidance for the average firm. We also examine the top quartile based on the measure of conforming tax avoidance and find a positive correlation between firm value and conforming tax avoidance for this subsample.

We examine how superstition shapes corporate tax avoidance and do so by taking a risk perspective and focusing on the zodiac-year belief prevalent in China.

We adopt a difference-in-differences research design to compare the degree of corporate tax avoidance in the CEOs’ zodiac year with that in the adjacent years. We do propensity-score matching to form a sample of Chinese listed firms for the regression analysis.

We find causal evidence that firms exhibit a greater magnitude of tax avoidance in the CEOs’ zodiac years, a result attributable to relatively weak tax enforcement in the Chinese context. We also find that the zodiac-year effect on corporate tax avoidance is more pronounced for firms with tight financial constraints, firms with high business risk, firms headquartered in regions with a high degree of superstition and non-state-owned firms.

This study is the first to show that superstition is a determinant factor of tax avoidance and contributes to the tax literature by shedding light on the behavioral risk factors that shape corporate tax avoidance. We take the perspective of CEOs’ risk appetite to analyze how tax avoidance is influenced by the CEOs’ trade-off between the costs and benefits of avoiding taxes. Our results suggest that, when CEOs are more risk-averse, they attach more importance to financial risk than the risk of reputational losses and litigation associated with corporate tax avoidance. The findings imply that tax avoidance can be curbed by increasing (or decreasing) the tax (financial) risk confronting the CEOs.

This paper aims to investigate the relationship between corporate tax avoidance and environmental, social and governance (ESG) performance and the moderating effect of financial constraints on the relationship between corporate tax avoidance and ESG performance.

The sample consists of a global data set involving 24,259 firm-year observations from 49 countries for the years 2011–2020. Corporate ESG performance was extracted from the Thomson Reuters database. The book-tax difference model was used for measuring corporate tax avoidance, while financially constrained firms were identified using the Kaplan and Zingales (1997) index.

The results show that firms with higher tax avoidance are associated with higher ESG performance, but lower ESG performance is shown for firms with higher financial constraints. The results further indicate that the positive impact of corporate tax avoidance on ESG performance becomes weaker for firms with higher financial constraints.

The findings imply that policymakers and regulators should focus on mechanisms to promote more internal funds to assist firms in pursuing ESG-related initiatives, such as through tax incentives. Investors should understand the “smokescreen” effect of corporate tax avoidance on ESG performance, especially for firms with financial constraints.

This analysis provides international evidence on the link between tax avoidance and ESG and considers the joint effect of pressures for internal funds, through tax and financing constraints, on corporate ESG performance.