Does Corporate Tax Avoidance Impair Earnings Informativeness?

Kubata, Adrian; Lietz, Gerrit M.; Watrin, Christoph

doi:10.2139/ssrn.2363873

Cited by 10 publications

(22 citation statements)

References 57 publications

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“…When accumulated bad news is disclosed all at once, the stock price crashes. Kubata et al (2013) use the earnings response coefficient (ERC) as a proxy for financial report informativeness and find a negative relationship between ERC and tax aggressiveness.…”

Section: Literature and Hypothesismentioning

confidence: 99%

Aggressive tax planning and stock price synchronicity: evidence from China

Feng

Habib

Tian

2019

IJMF

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Purpose The purpose of this paper is to investigate the association between aggressive tax planning and stock price synchronicity. Design/methodology/approach Employing the special institutional background of China, this study constructs tax aggressiveness and stock price synchronicity measures for a large sample of Chinese stocks spanning the period 2003–2015. The authors employ OLS regression as the baseline methodology, and a fixed effect model, the Fama–Macbeth method and GMM as sensitivity checks. Matched samples and difference-in-difference analyses are used to control for endogeneity. Findings The authors find a significant and positive association between aggressive tax planning and stock price synchronicity. Because material information about risky tax transactions tends to be hidden in various tax accruals accounts, aggressive tax strategies make financial statements less transparent, thereby, increasing information asymmetry and decreasing stock price informativeness. The authors also find that the firms engaging in aggressive tax planning exhibit relatively high corporate opacity. In addition, the authors find that improvements in the tax enforcement regime, ownership status and high-quality auditors all constrain the adverse effects of tax aggressiveness. Practical implications This study has important practical implications for China’s regulators, who are striving to reduce the tax burden of enterprises. It also helps investors to consider investment decisions more appropriately from a taxation perspective. Originality/value First, this paper contributes to the stock price efficiency literature by identifying the effect of a hitherto unexamined factor, namely, firm-level aggressive tax planning, on the efficiency of stock prices. Second, this study provides further empirical evidence to support the agency view of tax aggressiveness, and the informational interpretation of stock price synchronicity. Third, this study helps us better understand the effects of firm-level tax policy on firm-specific information capitalization in an environment where overall country-level investor protection is relatively weak.

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Section: Literature and Hypothesismentioning

confidence: 99%

Aggressive tax planning and stock price synchronicity: evidence from China

Feng

Habib

Tian

2019

IJMF

View full text Add to dashboard Cite

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“…Laporan keuangan merupakan media yang menyediakan informasi lengkap terkait dengan aktivitas perusahaan. Informasi tersebut akan digunakan oleh investor dalam menilai dan menganalisis risiko serta tingkat pengembalian investasi suatu perusahaan, termasuk dalam memprediksi aliran kas masa depan dan mengantisipasi future earnings (Kubata et al, 2013). Informasi laba oleh perusahaan merupakan salah satu informasi yang penting dan relevan bagi para pemangku kepentingan dalam rangka pengambilan keputusan.…”

Section: Pendahuluan 11 Latar Belakangunclassified

“…Informasi laba oleh perusahaan merupakan salah satu informasi yang penting dan relevan bagi para pemangku kepentingan dalam rangka pengambilan keputusan. Informasi tersebut dimanfaatkan oleh investor untuk menilai kinerja perusahaan, melakukan prediksi atas laba di masa depan dan estimasi atas risiko investasi atau risiko kredit (Kubata et al, 2013). Informasi yang terdapat di laporan keuangan dapat dianggap "berguna" jika memiliki implikasi valuasi, yaitu jika menyebabkan investor menyesuaikan harga saham (Zimmerman, 1983).…”

Section: Pendahuluan 11 Latar Belakangunclassified

“…Informasi yang terdapat di laporan keuangan dapat dianggap "berguna" jika memiliki implikasi valuasi, yaitu jika menyebabkan investor menyesuaikan harga saham (Zimmerman, 1983). Earnings response coefficient (ERC) dapat dijadikan sebagai alat untuk menilai kandungan informasi dalam laba yang dilaporkan karena ERC mampu mengidentifikasi dan memberikan penjelasan atas perbedaan respon pasar saat laba diumumkan melalui laporan keuangan (Kubata et al, 2013). Hubungan antara laba akuntansi dan tingkat pengembalian (return) saham dapat digunakan untuk menilai sebuah perusahaan.…”

Section: Pendahuluan 11 Latar Belakangunclassified

“…Hasil pengujian Ball & Brown (1968) menunjukkan bahwa semakin besar unexpected earnings yang dilaporkan oleh perusahaan akan direspon dengan meningkatnya abnormal return. Penelitian yang menguji hubungan return dan laba selanjutnya berkembang menjadi ERC yaitu pengaruh dari unexpected earnings terhadap return saham yang diukur sebagai slope dalam regresi abnormal return dan unexpected return (Kubata et al, 2013). Respon laba yang menurun, atau respon yang lebih lemah dari yang diharapkan secara teoritis, dapat diartikan sebagai berkurangnya keinformatifan laba dan kualitas laba (Firmansyah, 2017).…”

Section: Pendahuluan 11 Latar Belakangunclassified

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Apakah Agresivitas Pajak Menurunkan Tingkat Keinformatifan Laba Perusahaan?

Pamungkas¹,

Firmansyah²

2021

ULTIMA Accounting

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Abstract— This research aims to examine the association between tax aggressiveness and the level of earnings informativeness. This study examines whether tax aggressiveness is being responded to by the market. This study's methodology is a quantitative approach with multiple linear regression models and panel data. The sample employed in this study is trading sector companies listed on the Indonesia Stock Exchange (IDX). The type of data used in this study is secondary data sourced from financial statements, stock price information, and annual reports from 2017 to 2019. The sample selection using a purposive sampling method with the number of samples amounted to 48 firm-year. This study suggests that tax aggressiveness is negatively associated with the level of earnings informativeness. The complexity of the company's tax aggressiveness activities makes it more difficult for investors to understand the quality of earnings reported by the company. Keywords: Tax Aggressiveness; Tax Avoidance; Earnings Informativeness; ERC; Market Responsiveness

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