Executives’ Personal Tax Behavior and Corporate Tax Avoidance Consistency

Hjelström, Tomas; Kallunki, Juha‐Pekka; Nilsson, Henrik; Tylaite, Milda

doi:10.1080/09638180.2019.1642222

Cited by 10 publications

(3 citation statements)

References 57 publications

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“…They then concluded that executive background feature is an important determinant in firms' tax avoidance. More recent study by Hjelström, Kallunki, Nilsson and Tylaite [28] in Sweden also confirm that CEOs' and CFOs' personal tax behavior is related corporate tax avoidance. Law and Mills [29] argue that managers with military experience engage in less tax avoidance because aggressive tax avoidance may violate common values.…”

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confidence: 67%

The Woebegone State of Companies Income Tax in Nigeria: Evidence from Widespread Tax Avoidance by Profitable Listed Companies

Jim-Suleiman¹,

Ibiamke²

2021

IJFBR

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Profitable companies are expected to pay a 30% companies income tax on their profits earned in Nigeria. However, many companies in Nigeria pay far less due to their application of tax avoidance strategies. This paper report how profitable companies in Nigeria are able to successfully employed the loopholes in the Nigerian tax system to significantly lower their effective tax rate over the past five years. The paper examines 68 companies that are consistently profitable in each of the five years between 2014 and 2018, excluding companies that experienced even one unprofitable year during this period. From the analysis, this paper finds that as a group, the 68 companies examined paid an effective companies income tax rate of only 16.45% over the five-year period -far less than the statutory 30% companies' income tax rate. Based on the evidence, this paper advocate for a strong alternative minimum tax that can do the job it was originally designed to do thereby bring about transparency, equity and fairness in tax payment in Nigeria. This paper adds new knowledge to the understanding of the state of tax avoidance in Nigeria. Finally, identifying firms' aggressive tax planning strategies will close the tax loopholes and boosting tax revenue in Nigeria.

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confidence: 67%

The Woebegone State of Companies Income Tax in Nigeria: Evidence from Widespread Tax Avoidance by Profitable Listed Companies

Jim-Suleiman¹,

Ibiamke²

2021

IJFBR

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“…Prior research has examined the relation between tax avoidance and a wide range of firm-level factors, including firms' size (Zimmerman, 1983;Gupta and Newberry, 1997), profitability (Gupta and Newberry, 1997;Richardson and Lanis, 2007), life cycle (Hasan, Al-Hadi, Taylor and Richardson, 2017), ownership structure (Chen, Chen, Cheng and Shevlin, 2010), asset mix (Gupta and Newberry, 1997;Richardson and Lanis, 2007), and foreign operations (Rego, 2003). Some have also linked tax avoidance to management styles (Dyreng et al, 2010), governance structures (Desai and Dharmapala, 2006), incentive compensations (Armstrong, Blouin and Larcker, 2012), and executives' personal tax behaviour (Hjelström, Kallunki, Nilsson and Tylaite, 2019). In general, prior studies show that the level of tax avoidance is significantly related to internal firm characteristics.…”

Section: Prior Literature On Tax Avoidancementioning

confidence: 99%

The Geography of Corporate Tax Avoidance.

Pan¹

2020

Preprint

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Prior literature documents that corporate policies, especially those that involve unethical choices, tend to vary geographically. We examine whether firms' geographical locations have explanatory power regarding why some firms are more likely to engage in tax avoidance activities and find consistently significant location fixed effects on multiple measures of firms' tax avoidance behaviour. Additional analyses show that the location fixed effects are more pronounced for firms that have been located in a certain geographic area for longer and that have lower geographic diversification. We then explore a range of regional characteristics as determinants of location fixed effects and find some evidence that location effects are correlated with the local education level of the workforce population, distance to the Internal Revenue Service (IRS) supervision, and weather patterns.

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“…We follow prior research and subtract other special items from the pretax book income as they can introduce some volatility in our tax avoidance measure(Dyreng et al, 2008;Minnick & Noga, 2010). Following prior research, Cash ETR is winsorized at 0 and 1(Hjelström et al, 2020). We collected the data necessary to calculate tax avoidance from Compustat.…”

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confidence: 99%

Ownership structure and political spending disclosure

2021

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This study examines the link between ownership structure and political spending disclosure (PSD). We break down ownership into four different groups of shareholders: institutional, insider, governmental and foreign. Using a unique dataset provided by CPA-Zicklin for PSD and a panel dataset from S&P 500 companies between 2015 and 2018, our results reveal that institutional and governmental ownership are positively associated with the level of PSD, while insider ownership is negatively associated with the level of PSD. Additionally, while prior literature mainly investigated how ownership structure influences disclosure practices, we analyse the mechanisms through which ownership characteristics influence PSD. Our cross-sectional tests provide evidence that insider owners exhibit more PSD if they are pursing tax-related lobbying expenses and tax avoidance practices. Additionally, governmental owners demand lower PSD in firms with higher nonfinancial and financial reporting quality. Finally, institutional owners demand more PSD in the case of lower industry concentration. Overall, we conclude that different owners have distinct impacts and preferences on a firm's political strategy and various mechanisms uniquely operationalise the interactions between different owners and political transparency. Through agency theory, our results advance heated debates on PSDan emerging, yet hitherto less examined, category of voluntary disclosure.

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Executives’ Personal Tax Behavior and Corporate Tax Avoidance Consistency

Cited by 10 publications

References 57 publications

The Woebegone State of Companies Income Tax in Nigeria: Evidence from Widespread Tax Avoidance by Profitable Listed Companies

The Woebegone State of Companies Income Tax in Nigeria: Evidence from Widespread Tax Avoidance by Profitable Listed Companies

The Geography of Corporate Tax Avoidance.

Ownership structure and political spending disclosure

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