Can corporate diversification induce more tax avoidance?

Zheng, Suyan

doi:10.1016/j.mulfin.2017.05.008

Cited by 26 publications

(62 citation statements)

References 41 publications

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“…The second reason may be the ineffective managerial performance. Indeed, managers may avoid tax payment (reduced cash outflow for taxes) in order to hide their weaknesses and prevent their devaluation ( Zheng, 2017). The tax evasion debate seems to be more of a case with companies with separation of ownership, since people are less involved in tax avoidance and evasion because of the possibility of being detected and fined and due to risk aversion or intrinsic motives like social duty.…”

Section: Introductionmentioning

confidence: 99%

“…Many of the contemporary organizations in the world tend to grow their business environment. Managers try to be more loyal to their organizations by meeting the multi-faceted needs of their customers and ultimately increase profitability and the wealth of their shareholders (Ansoff, 1975) and improve the corporate value (Zheng, 2017), as the strategy for single-product business units has changed to a diverse one (Karimi, 2015). Corporate diversity occurs when companies have more than one business sector or have more sectors than the previous year.…”

Section: Introductionmentioning

confidence: 99%

“…Many diversified companies are the largest in the world, which sell their products and services around the world. The extent of product distribution and service delivery affects not only stock returns and profits but also tax liabilities (Zheng, 2017). It is expected that larger firms have greater operation sustainability and predictable operations (Noravesh et al, 2006).…”

Section: Introductionmentioning

confidence: 99%

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The Role of Corporate Diversification in Tax Avoidance in Companies Listed in the Tehran Stock Exchange

Vahdani

Najafabadi

Kermani

et al. 2019

HSSR

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Purpose of the Study: Tax avoidance means the use of gaps in tax laws for non-payment or late payment of taxes for companies, which is affected by different factors. The present study investigates the impact of diversification on tax avoidance in companies. To this end, the financial information of 384 firms during the period of 2011- 2016 in the Tehran Stock Exchange was examined. Methodology: In this research, the required financial information was summarized, classified, and calculated in Excel software and the data were analyzed by using E-views software. The dependent variables were effective tax rate and book-tax difference, while the independent variable was corporate diversification, which shows how to divide the market between business sectors (units) in a company. Control variables include size, financial leverage, company’s loss-making, ROA, capital expenditures, R&D, market to book value, CEO ownership, and management of ownership. Conclusions/Results: The findings obtained from this study demonstrate that at a 95% confidence level, there is no significant relationship between diversification and effective tax rates in companies listed in the Tehran Stock Exchange. However, at a 90% confidence level, diversification reduces the effective tax rate. Furthermore, no reliable evidence was found regarding the effect of diversification on book-tax difference at a 95% confidence level. Novelty: Tax is a charge imposed by the government on all organizational profits. Various enterprises have complex operations due to their institutional structure, which makes it possible to increase tax avoidance in these companies. The production or sale of a variety of products (diversification) is bigger and has more complex organizational structures that increase the cost of management and non-management decisions, making it difficult for companies to coordinate their policies. Thematic classification: G10, M41

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Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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The Role of Corporate Diversification in Tax Avoidance in Companies Listed in the Tehran Stock Exchange

Vahdani

Najafabadi

Kermani

et al. 2019

HSSR

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“…Existem também pesquisas contemporâneas que associam Agressividade Tributária a característi-cas, tais quais a responsabilidade social corporativa e sua reputação (Davis et al, 2016;Hoi, Wu & Zhang, 2013); marcas de consumo valioso (Watson, 2015); a conexões políticas (Brown, Drake & Wellman, 2015;Mills, Nutter & Schwab, 2013); uso de instrumentos financeiros derivados (Donohoe, 2015); fato de atuar em negócios diversificados (Zheng, 2017); e estar enfrentando dificuldades em planos de pensão (Chaudhry, Au Yong & Veld, 2017).…”

Section: Características Das Firmasunclassified

Agressividade Tributária: Um Survey da Literatura

Martinez

2017

REPeC

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Objetivo e Método: o objetivo deste artigo é revisar os estudos internacionais e no Brasil sobre a agressividade tributária, esta entendida como o comportamento de tentar evitar ou minimizar o ônus tributário explícito para a corporação. Enquanto tema de pesquisa acadêmica, o tax aggressiveness ou tax avoidance revela-se em um tópico diversificado e vasto, embora relativamente recente. Resultados e Contribuições: Entre as perguntas de pesquisa que nessa temática se desenvolvem, destaquem-se a identificação de quais seriam os determinantes da agressividade tributária da firma, apreciando: (i) características das firmas; (ii) atributos ambientais; (iii) restrições de gatekeepers; e (iv) incentivos para as firmas. Revisam-se os determinantes da agressividade tributária dos gestores e a influência da governança e estrutura de controle. Adicionalmente, identificam-se as potenciais consequências econômico-financeiras da agressividade tributária para as firmas e as proxies empíricas existentes para mensurar a agressividade tributária. O estudo se encerra com a apresentação de oportunidades futuras de pesquisa na temática.

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“…No obstante todas las advertencias anteriores, existen muchas corporaciones que deciden emprender diversificaciones no relacionadas en su plan de desarrollo de negocios. Las razones para justificar tal nivel de diversificación no relacionada pueden ser varias: la búsqueda de economías de escala y de alcance (Brush, 1996;Weston, 1970;Chandler, 1977), economizar costos de transacción (Teece, 1982), para que los gerentes puedan reducir el riesgo idiosincrático y capturar mayores beneficios privados (Aggarwal & Samwicic, 2003;Amihud & Lev, 1981), para hacer más fácil la reasignación de activos entre unidades de negocio (Gertner, Scharfstein & Stein, 1994), la diversificación le permite al gerente crear una gran corporación ( Jensen, 1986) y hacerse más indispensable para manejarla (Shleifer & Vishny, 1989), y para incrementar la capacidad de endeudamiento y los escudos fiscales por diversificación del riesgo operativo (Lewellen, 1971;Khanna & Palepu, 2000;Lins & Servaes, 2002;Zheng, 2017).…”

Section: Introductionunclassified

Decisión de diversificación y decisión de Spin-off. Ciclos de expansión y ciclos de enfoque: Analisis retrospectivo de las evidencias del caso Bavaria

Herrera-Eceheverri

2018

Universidad&Empresa

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Esta propuesta utiliza el caso del Antigüo Grupo Empresarial Bavaria para analizar tres aspectos relacionados con la diversificación no relacionada y el proceso de spin off de las firmas. Primero se establece que las empresas con unidades de negocio caracterizadas por excesos de liquidez, se diversifican de manera no relacionada, debido a que la existencia de un mercado interno de capitales, les permite derribar sus restricciones de financiación e incrementar la rentabilidad corporativa. Segundo, se demuestra que la decisión de diversificación de un gerente corporativo es inversamente proporcional a la magnitud del costo esperado por la dilución de esfuerzo del gerente de la nueva unidad de negocio. Y finalmente, se muestra como la diversificación no relacionada presenta un límite en su contribución al incremento de la rentabilidad corporativa, en cuyo caso se puede inducir la decisión de realizar un spin off, para delimitar, especializar y mejorar la calidad de las decisiones de asignación de recursos. Se concluye que lo anterior puede explicar porque en algunos grupos económicos se observan ciclos de diversificación y ciclos de enfoque. Cuando el grupo económico desea incrementar la rentabilidad inicia su proceso de diversificación, una vez llega al umbral que hace que la probabilidad de acierto en sus decisiones de inversión se reduzca, entonces empieza nuevamente su proceso de enfoque, realizando separación de sus unidades no relacionadas. Este ciclo se puede repetir en el desarrollo histórico de un grupo empresarial.

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Can corporate diversification induce more tax avoidance?

Cited by 26 publications

References 41 publications

The Role of Corporate Diversification in Tax Avoidance in Companies Listed in the Tehran Stock Exchange

The Role of Corporate Diversification in Tax Avoidance in Companies Listed in the Tehran Stock Exchange

Agressividade Tributária: Um Survey da Literatura

Decisión de diversificación y decisión de Spin-off. Ciclos de expansión y ciclos de enfoque: Analisis retrospectivo de las evidencias del caso Bavaria

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