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Article
Publication date: 22 January 2024

Haibo Feng and Caixia Zong

This study aims to investigate the influence and impact mechanism of capital tax incentives on firm innovation.

Abstract

Purpose

This study aims to investigate the influence and impact mechanism of capital tax incentives on firm innovation.

Design/methodology/approach

This study employs the difference-in-differences (DID) method, in conjunction with the exogenous impact of accelerated depreciation (AD) pilot policy. This study selects Chinese listed companies from 2010 to 2017 as the research sample.

Findings

Firstly, AD exerts a substantial positive effect on the quantity and quality of the innovation output of firms, and the positive impact results primarily from heightened investment in fixed assets, particularly, machinery and equipment. Secondly, the influence of the policy is pronounced in non-state-owned enterprises, mature enterprises, less capital-intensive enterprises and non-high-tech industries, which all exhibit strong innovation incentives. Lastly, the tax incentive policy significantly stimulates firm innovation in the short term, but its long-term impact on innovation incentives lacks statistical significance.

Originality/value

This study highlights the significance of capital tax incentives in facilitating the innovation process in firms.

Details

Kybernetes, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0368-492X

Keywords

Article
Publication date: 19 February 2024

Chunmei Fan and Xiaoyue Li

This study reveals the green building development path and analyzes the optimal government subsidy equilibrium through evolutionary game theory and numerical simulation. This was…

Abstract

Purpose

This study reveals the green building development path and analyzes the optimal government subsidy equilibrium through evolutionary game theory and numerical simulation. This was done to explore the feasible measures and optimal incentives to achieve higher levels of green building in China.

Design/methodology/approach

First, the practice of green building in China was analyzed, and the specific influencing factors and incentive measures for green building development were extracted. Second, China-specific evolutionary game models were constructed between developers and homebuyers under the market regulation and government incentive mechanism scenarios, and the evolutionary paths were analyzed. Finally, real-case numerical simulations were conducted, subsidy impacts were mainly analyzed and optimal subsidy equilibriums were solved.

Findings

(1) Simultaneously subsidizing developers and homebuyers proved to be the most effective measure to promote the sustainability of green buildings. (2) The sensitivity of developers and homebuyers to subsidies varied across scenarios, and the optimal subsidy level diminished marginally as building greenness and public awareness increased. (3) The optimal subsidy level for developers was intricately tied to the building greenness benchmark. A higher benchmark intensified the developer’s responsiveness to losses, at which point increasing subsidies were justified. Conversely, a reduction in subsidy might have been appropriate when the benchmark was set at a lower level.

Practical implications

The expeditious advancement of green buildings holds paramount importance for the high-quality development of the construction industry. Nevertheless, the pace of green building expansion in China has experienced a recent deceleration. Drawing insights from the practices of green building in China, the exploration of viable strategies and the determination of optimal government subsidies stand as imperative initiatives. These endeavors aim to propel the acceleration of green building proliferation and materialize high-quality development at the earliest juncture possible.

Originality/value

The model is grounded in China’s green building practices, which makes the conclusions drawn more specific. Furthermore, research results provide practical references for governments to formulate green building incentive policies.

Details

Engineering, Construction and Architectural Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0969-9988

Keywords

Article
Publication date: 12 July 2022

Parisa Alizadeh and Maghsoud Amiri

Business research and development (R&D) is of critical importance for innovation and economic growth. The purpose of this study is to present an application of the analytic…

Abstract

Purpose

Business research and development (R&D) is of critical importance for innovation and economic growth. The purpose of this study is to present an application of the analytic hierarchy process (AHP) to select the most appropriate policy measure to support the business expenditure on R&D (BERD).

Design/methodology/approach

AHP method adopts a multi-criteria approach that can be used to analyse and prioritize the policy measures based on pairwise comparisons between several attributes that affect the selection of a policy tool. The model formulated in this study is applied to a real case of supporting decision-makers in some high-tech sectors in Iran.

Findings

The results highlight the four main financial policy measures implemented in Iran to enhance the BERD; those are, public procurement for R&D, direct subsidies for R&D, grants for R&D and income tax credit for firms have the priority values of 0.280, 0.260, 0.249 and 0.211, respectively.

Research limitations/implications

The findings of this study are based on subjective evaluation of policy measures by experts of designing policy measures. Objective assessment of policy measures is important too because the preferences of policy interventions change during the time. Another significant point is that the priorities of specific policy measures depend on the effectiveness of their implementing arrangement and the previously successful experience of firms in receiving them.

Originality/value

This paper presents an application of the AHP to select the most appropriate policy measure to support the BERD. This method could be used to prioritize the policies and interventions that governments implement to solve different problems, especially at the innovation system level.

Details

Journal of Science and Technology Policy Management, vol. 15 no. 1
Type: Research Article
ISSN: 2053-4620

Keywords

Article
Publication date: 10 January 2024

Jayalakshmy Ramachandran, Joan Hidajat, Selma Izadi and Andrew Saw Tek Wei

This study investigates the influence of corporate income tax on two corporate financial decisions — dividend and capital structure policies, particularly for Shariah compliant…

Abstract

Purpose

This study investigates the influence of corporate income tax on two corporate financial decisions — dividend and capital structure policies, particularly for Shariah compliant companies in Malaysia.

Design/methodology/approach

The study considered data from a sample of 529 Malaysian listed companies from four industrial sectors from 2007–2021 (6,746 company-year observations, before eliminating outliers). Panel models such as Fixed Effect and Random effect models were used. The study specifically tested the effect of corporate income tax on dividend and capital structure policies for Shariah compliant companies (3,148 observations) and controlled for industrial sectors.

Findings

(1) Firms are mostly Shariah-compliant, less liquid, less profitable and smaller in size, (2) Broadly when analysed together, tax has no impact on debt-equity ratio while it has an impact on dividend per share, (3) However, when tested separately for Shariah compliant companies, the influence of effective tax on capital structure is very evident but not for dividend and (4) influence of industrial sector on the relationship between corporate tax and capital structure and dividend policy is significant. Results indicate that Shariah firms might be raising debt to gain tax advantage. Companies in general pay dividends to avoid reputational damage.

Research limitations/implications

This study assumes that leverage and dividend policy decisions are the main outcomes of the changing tax policies, while it seems that there could be other important outcomes that can be tested in future research. The study also shows the changing tax regimes of different ASEAN countries but they have not been tested to see the differences between countries. It will be indeed interesting for future researchers to focus on this aspect.

Originality/value

The findings contribute to the literature on tax planning of the Shariah-compliant firms, a high growth business segment in the Asian context. The study discussed potential tax-based Islamic market product development.

Details

Managerial Finance, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0307-4358

Keywords

Open Access
Article
Publication date: 24 January 2024

Abubakar Musah, Peter Kwasi Kodjie and Munkaila Abdulai

This paper examines the short- and long-run effects of foreign direct investment (FDI) on tax revenue in Ghana.

Abstract

Purpose

This paper examines the short- and long-run effects of foreign direct investment (FDI) on tax revenue in Ghana.

Design/methodology/approach

The paper adopts the autoregressive distributed lag approach to estimate FDI’s long-run and short-run effects on tax revenue. The study uses time-series data from 1983 to 2019 for Ghana, mainly obtained from The Bank of Ghana, the World Bank and the IMF.

Findings

The results show that, in the short-run, FDI has no significant effect on direct tax revenue and total tax revenue but significantly hurts indirect tax revenue. In the long run, however, the results show that FDI has significant positive effects on indirect tax revenue and total tax revenue but no significant effect on direct tax revenue.

Originality/value

Empirical studies often fail to analyse the short-run and long-run effects of FDI on tax revenue. This study contributes to the mixed literature by analysing the short-run and long-run effects of FDI on tax revenue in an emerging market context. Additionally, this study employs three tax revenue measures in analysing the nexus.

Details

Journal of Humanities and Applied Social Sciences, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2632-279X

Keywords

Article
Publication date: 14 March 2024

Grant Richardson, Grantley Taylor and Mostafa Hasan

This study examines the importance of income income-shifting arrangements of US multinational corporations (MNCs) on future stock price crash risk.

Abstract

Purpose

This study examines the importance of income income-shifting arrangements of US multinational corporations (MNCs) on future stock price crash risk.

Design/methodology/approach

This study employs a sample of 7,641 corporation-year observations over the 2005–2017 period and uses ordinary least squares regression analysis.

Findings

The authors find that the income-shifting arrangements of MNCs are positively and significantly associated with stock price crash risk after controlling for corporate tax avoidance and other known determinants of stock price crash risk in the regression model. This result is robust to alternative measures of stock price crash risk and income-shifting, and several endogeneity tests. The authors also observe that income-shifting arrangements increase stock price crash risk both directly and indirectly through the information opacity channel. Finally, in cross-sectional analyses, the authors find that the positive association between income-shifting and stock price crash risk is more pronounced for MNCs that use tax haven subsidiaries and have weak corporate governance mechanisms.

Originality/value

The authors provide new empirical evidence that MNCs will likely face significant capital market consequences regarding their income-shifting arrangements.

Details

Journal of Accounting Literature, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0737-4607

Keywords

Article
Publication date: 24 May 2023

Wanyi Chen and Fanli Meng

Corporate digital transformation (CDT) has challenged traditional tax administration systems. This study examines the impact of CDT on tax avoidance behavior and tests whether tax…

Abstract

Purpose

Corporate digital transformation (CDT) has challenged traditional tax administration systems. This study examines the impact of CDT on tax avoidance behavior and tests whether tax authorities can identify this behavior.

Design/methodology/approach

Using data on listed companies on the Shanghai and Shenzhen Stock Exchanges from 2008 to 2020, this study applies the Heckman two-stage and cross-section models.

Findings

The results show that the higher the degree of CDT, the more aggressive the tax avoidance behavior. The CDT's impact on corporate tax avoidance is more significant under strong government tax efforts.

Originality/value

This study expands research on the economic consequences of CDT and the factors influencing corporate tax avoidance behavior. Moreover, it has important implications for governments to monitor tax avoidance behavior under the CDT, improve digital tax systems, and pay more attention to the tax administration of digital assets.

Details

International Journal of Managerial Finance, vol. 20 no. 2
Type: Research Article
ISSN: 1743-9132

Keywords

Article
Publication date: 13 July 2023

Saida Dammak and Manel Jmal Ep Derbel

The present work aimed to present the perception of Tunisian professionals towards companies engaged in social responsibility practices and describe the tax evasion strategies of…

Abstract

Purpose

The present work aimed to present the perception of Tunisian professionals towards companies engaged in social responsibility practices and describe the tax evasion strategies of socially responsible Tunisian companies following the coronavirus disease 2019 (COVID-19) pandemic (COVID-19) shock.

Design/methodology/approach

A survey was sent to 119 Tunisian tax administration auditors. Data analysis methods principal component analysis (PCA) and regression analysis were used. The data were collected through a questionnaire after the general containment of Tunisia from September 2020 to February 2021. These quantitative data were analysed using processing software (STATA).

Findings

Professionals of the tax authorities, particularly those in charge of the audit mission, aim for corporate profitability from the perspective of stakeholders that seek to integrate ethics and social responsibility into companies and consider employee morale a top priority. The results show that highly ethical and socially responsible professionals are far from practising aggressive strategies. Thus, an auditor from the tax administration is far from engaging in social responsibility to justify fraudulent acts. During the COVID-19 period, the role of these professionals was to prevent and detect fraud in the tax sector to fight corruption and investigate taxes based on sound regulations.

Research limitations/implications

The results are consistent with optimal taxation theory, which postulates that a tax system should be chosen to maximise a social welfare function subject to a set of constraints. Professionals seek to make taxation much simpler for taxpayers by providing advice and consultation to manage tax obligations. The minimisation of tax or the play of tax values requires expertise in the field to respect legal constraints. Therefore, these professionals play a crucial role in tax collection, as the professionals' advice and suggestions can influence taxpayers' decision-making.

Practical implications

In recent years, academic researchers, policy makers and the public have become increasingly interested in corporate tax evasion behaviour. At the same time, companies are under increasing pressure to integrate CSR into the companies' decision-making processes, which has led to increased academic interest in CSR. Opportunistic tax minimisation reduces state resources and funds needed for government programmes to improve the social welfare of the entire community. This study represents an overriding concern not only for legal and tax authorities and companies, but also for shareholders and stakeholders.

Originality/value

The authors' study contributes to the existing literature by determining the state of play on corporate social responsibility (CSR) practices amongst Tunisian tax authorities' professionals. In Tunisia, an executive of the tax authorities in charge of the verification mission is required to verify the proper application of the accounting and tax legislation in force, follow up on tax control operations on declared taxes and validate the sincerity of the accounts. This study focussed on the tax evasion of companies engaged in social responsibility practices according to the judgements of Tunisian tax authorities' auditors during the global COVID-19 pandemic.

Details

Journal of Applied Accounting Research, vol. 25 no. 2
Type: Research Article
ISSN: 0967-5426

Keywords

Article
Publication date: 27 March 2024

Arfah Habib Saragih

This paper examines the moderating effect of good corporate governance on the association between internal information quality and tax savings.

Abstract

Purpose

This paper examines the moderating effect of good corporate governance on the association between internal information quality and tax savings.

Design/methodology/approach

This study uses a quantitative approach. It employs an Australian sample of analysis composed of 1,295 firm-year observations from the period 2017 to 2021. Data relating to corporate governance are hand-collected from the annual reports.

Findings

Based on the result of the analysis, this study demonstrates that the interaction between corporate governance and quality of internal information is positively associated with tax savings. Superior corporate governance is critical in activating the effect of internal information quality on tax savings. This finding is robust to a battery of robustness checks and additional tests.

Research limitations/implications

This examination utilizes only publicly traded companies from one developed country.

Practical implications

For the company management, an effective governance structure must be at the top because it will determine the development of all other areas. This study emphasizes the need to continuously improve the effectiveness of corporate governance practices. For long-term investors, an important indicator that can be considered in assessing the “safety” of a company’s tax strategy is its corporate governance aspects. For regulators, this study is expected to assist regulators in creating a more adequate corporate governance implementation and disclosure package to be implemented by corporations in the future.

Originality/value

This study provides new evidence on a crucial construct that can strengthen the relationship between internal information quality and tax savings.

Details

Journal of Accounting Literature, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0737-4607

Keywords

Article
Publication date: 21 June 2022

Han Yu, Ciji Song and Zengji Song

Against the background of actively promoting the reform of mixed ownership in China, this study regards government ownership in private sector enterprises (PSEs) as an important…

Abstract

Purpose

Against the background of actively promoting the reform of mixed ownership in China, this study regards government ownership in private sector enterprises (PSEs) as an important political connection mechanism and examines private holding listed companies in high-polluting industries that sold China A-shares from 2012 to 2019.

Design/methodology/approach

Using regression models such as Tobit and negative binomial estimation, the research empirically examines the impact of government ownership in PSEs on the corporate fulfillment of their environmental responsibilities.

Findings

Government ownership can effectively promote PSEs to fulfill their environmental responsibilities. Government ownership, as a corporate-level political connection mechanism, enables the government to provide firms with more environmental protection subsidies and environmental tax incentives, encouraging firms to fulfill their environmental responsibilities. When considering the policy risks faced by PSEs, government ownership effectively reduces the impact of policy uncertainty on firms’ fulfillment of environmental responsibilities. Additionally, verifying the economic development level of the city in which the firm is located makes the positive impact of government ownership on fulfillment of environmental responsibilities of PSEs in regions with lower economic development levels more significant.

Originality/value

Unlike existing studies that generally use the personal political identity of entrepreneurs to measure the political connections of PSEs, this study regards government ownership in PSEs as an important political connection mechanism. It provides a useful reference for China to formulate environmental protection policies for PSEs.

Details

International Journal of Emerging Markets, vol. 19 no. 1
Type: Research Article
ISSN: 1746-8809

Keywords

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