Political connections, joint audit and tax avoidance: evidence from Islamic banking industry

Ajili, Hana; Khlif, Hichem

doi:10.1108/jfc-01-2019-0015

Cited by 18 publications

(35 citation statements)

References 40 publications

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“…Tax avoidance is regarded as the reduction of explicit taxes via legal tax planning or illegal sheltering (Hanlon and Heitzman, 2010). Consistent with prior literature (Ajili and Khlif, 2020; Badertscher et al , 2013; Dyreng et al , 2010; Gaaya et al , 2017), tax avoidance is measured using effective tax rate that refers to total tax expense scaled by the pre-tax income. It is an inverse function of effective tax rate (Gaaya et al , 2017).…”

Section: Methodsmentioning

confidence: 99%

Tax avoidance and audit report lag in South Africa: the moderating effect of auditor type

Gontara

Khlif

2021

JFC

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Purpose The purpose of this paper is to examine the association between audit report lag (ARL) and tax avoidance and test whether external auditor type affects this relationship. Design/methodology/approach ARL is measured as the number of days from fiscal year-end to the date of the auditor’s report, while tax avoidance is measured using effective tax rate. Findings Using a sample of 45 South African companies over the period of 2010–2013, the authors document that ARL is positively associated with tax avoidance and this relationship remains positive when the company is audited by a Big-4 audit firm and not significant when the company is audited by a non-Big-4. Originality/value The authors’ findings have important implications for auditors aiming to reduce audit risk as they may consider the impact of tax avoidance and pay more attention to companies with a high degree of tax avoidance.

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Section: Methodsmentioning

confidence: 99%

Tax avoidance and audit report lag in South Africa: the moderating effect of auditor type

Gontara

Khlif

2021

JFC

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“…Di Amerika Serikat, ditemukan bahwa perusahaan yang terkoneksi secara politik lebih agresif terhadap pajak daripada perusahaan yang tidak terkoneksi politik (Kim & Zang, 2016). Penelitian pada perusahaan perbankan syariah di Cina mendapatkan hasil bahwa koneksi politik berpengaruh positif terhadap agresivitas pajak (Ajili & Khlif, 2020). Sebuah studi dari (Faccio, 2011) menemukan terdapat hubungan antara koneksi politik dan tarif pajak yang efektif untuk sampel perusahaan internasional dari 47 negara.…”

Section: Submission Date: July 2021unclassified

“…Political Favoritism Effect adalah suatu kondisi dimana political connection berpengaruh pada semakin tingginya agresivitas pajak. (Ajili & Khlif, 2020) mengemukakan bahwa koneksi politik berhubungan dengan agresivitas pajak. Semakin baik kemampuan manajer dalam melobi pemerintah, maka tingkat agresivitas pajaknya akan semakin tinggi.…”

Section: Political Favoritism Effect Dan Bureaucratic Incentive Effectunclassified

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Political Connections and Tax Aggressiveness: The Role of Gender Diversity as a Moderating Variable

Satiti

Syafik

Widarjo

2021

accounting, auditing, information

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Aggressive tax management actions lead to a low tax ratio in Indonesia. The purpose of this study was to determine the effect of political connections on tax aggressiveness and to determine the moderation of gender diversity on the effect of political connections on tax aggressiveness. This research is a type of quantitative research using moderated regression analysis using STATA software. The dependent variable of this study is tax aggressiveness, the independent variable is political connections and the moderating variable is gender diversity. The sample of this research is the mining sector companies listed on the IDX during the 2015-2019 period. Secondary data is obtained based on the annual financial statements that are on the IDX. The findings show that political connections have a positive effect on tax aggressiveness and gender diversity cannot moderate the positive effect of political connections on tax aggressiveness. This research has implications for the government in making regulations related to taxation and input to the government to pay attention to political connections as a gap in aggressive tax management. This research also contributes to companies in giving consideration to avoiding tax aggressiveness because it can damage the company's reputation, as well as providing input to companies to pay attention to the existence of political connections and gender diversity.

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“…Finally, Ajili and Khlif (2020) have examined the effect of board members’ political connections on tax avoidance within Islamic banking industry in MENA countries and whether joint audit moderates such an association. They document that board members’ political connections are negatively associated with effective tax rate, and this negative association is weakened when an Islamic bank is audited by two auditors.…”

Section: Political Connection Effectsmentioning

confidence: 99%

A review of the influence of political connections on management’s decision in non-US settings

Amara

Khlif

2020

JFRA

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Purpose Given the interest in better understanding the economic effects of political connections, this paper aims to review empirical studies in the accounting and finance domain investigating the effects of firms’ political connections on management’s decision in non-US settings. Design/methodology/approach Key words used to search for relevant studies include “political connections” linked with “tax avoidance,” “earnings quality” “voluntary disclosure.” The authors consult several editorial sources including Elsevier, Electronic Journals Service EBSCO, Emerald, Springer, Palgrave Macmillan, Sage, Taylor & Francis and Wiley-Blackwell. The authors’ search yields 46 published studies since 2006. Findings The review reveals a prevalence of studies conducted in Asia. A narrative synthesis of empirical findings shows mixed effects of political connections on earnings management, as measured by accrual-based or real earnings management practices. Mixed evidence also exists for the association between political connections and reporting policy (e.g. corporate social responsibility reporting). The review also reveals that firms with political ties adopt an aggressive tax policy aimed at reducing effective tax rates and are more likely to choose a Big 4 auditor. Originality/value The review discusses the political connections literature focusing on studies outside of the USA and the effect of such connections on decision-making by management. It identifies some limitations of this literature and offers guidance for future research avenues. The synthesis suggests that political connections can adversely or beneficially impact management’s decisions depending on the legal, institutional and cultural characteristics prevailing in a particular setting.

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Political connections, joint audit and tax avoidance: evidence from Islamic banking industry

Cited by 18 publications

References 40 publications

Tax avoidance and audit report lag in South Africa: the moderating effect of auditor type

Tax avoidance and audit report lag in South Africa: the moderating effect of auditor type

Political Connections and Tax Aggressiveness: The Role of Gender Diversity as a Moderating Variable

A review of the influence of political connections on management’s decision in non-US settings

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