Strategic reactions in corporate tax planning

Armstrong, Christopher; Glaeser, Stephen; Kepler, John D.

doi:10.1016/j.jacceco.2019.03.003

Cited by 73 publications

(43 citation statements)

References 51 publications

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“…First, the company taxing strategy in the same strategy has a similar pattern of taxing strategy. It supports the research by Armstrong et al (2019) stating that there is strategic reaction of companies in tax planning. Companies would respond to changes in tax planning performed by their industry competitors by changing tax planning in the same direction.…”

Section: The Model Of This Research Are As Followssupporting

confidence: 82%

“…The previous research stated that the company's decision showed that it was highly dependent on the behavior of competitors and companies in the same industry, whether it was related to research and development, promotion, and capital expenditure. Armstrong et al (2019) explains that in determining tax planning, companies and competitors in the same industry also had roles. The second thing that deserve more attention are that the manufacturing industry is likely to have a level of aggressive activity JRAK 10.2 that is similar to mining companies that gain more spotlight than manufacturing companies nowadays.…”

Section: The Model Of This Research Are As Followsmentioning

confidence: 99%

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Corporate Social Responsibility Disclosure: Tax Agresiveness Indication?

Kurniawan

Lasmana

Novita

2020

JRAK

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The purpose of this study to test whether Corporate Social Responsibility disclosure can be used as a firms’ indication of the tax aggressiveness. Unlike the previous study, this paper uses both Effective Tax Rate Differences and Current Effective Tax Rate to provide the degree of aggressiveness. Besides, it compares among industries in Indonesia. The independent variable of this research is Corporate Social Responsibility disclosure measured by the Corporate Social Responsibility Disclosure Index based on the GRI G4 standard. The sample of this research is companies listed on the Indonesia Stock Exchange during the 2014-2018 period, except for the financial and construction sector. With 506 observations, the results of this research indicate that Corporate Social Responsibility disclosure has a significant effect on tax aggressiveness. The research implication provides the awareness to the tax authority that a good reputation of social responsibility can be a sign of tax aggressiveness existence. In addition, the result suggests that industry type is needed to be considered relate to taxation strategies.

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Section: The Model Of This Research Are As Followssupporting

confidence: 82%

Section: The Model Of This Research Are As Followsmentioning

confidence: 99%

Corporate Social Responsibility Disclosure: Tax Agresiveness Indication?

Kurniawan

Lasmana

Novita

2020

JRAK

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“…Stakeholder agency theory suggests that when faced with competing stakeholder demands, the CEO will focus on an outcome that can be readily cast as balancing shareholder interests (e.g., Hill and Jones, 1992; Mitchell et al, 2016). Prior studies suggest that when CEOs frame their corporate tax strategy, they pay close attention to the tax choices of – and thus, the rate of tax likely to be paid by – peer firms (Armstrong et al, 2019; Bird et al, 2018; Chyz and Gaertner, 2018; Cook et al, 2017; Kubick and Lockhart, 2016). Firms that ‘stand out’ among their peers in terms of the aggressiveness of their tax planning are more likely to be audited by tax authorities or face legislative and regulatory scrutiny (Armstrong et al, 2019; Heitzman and Ogneva, 2018).…”

Section: Theory and Hypotheses Developmentmentioning

confidence: 99%

“…Prior studies suggest that when CEOs frame their corporate tax strategy, they pay close attention to the tax choices of – and thus, the rate of tax likely to be paid by – peer firms (Armstrong et al, 2019; Bird et al, 2018; Chyz and Gaertner, 2018; Cook et al, 2017; Kubick and Lockhart, 2016). Firms that ‘stand out’ among their peers in terms of the aggressiveness of their tax planning are more likely to be audited by tax authorities or face legislative and regulatory scrutiny (Armstrong et al, 2019; Heitzman and Ogneva, 2018). On the contrary, a tax rate above that of peer firms gives rise to shareholder disquiet (Hanlon and Slemrod, 2009).…”

Section: Theory and Hypotheses Developmentmentioning

confidence: 99%

Stakeholder Agency Relationships: CEO Stock Options and Corporate Tax Avoidance

Zolotoy

O’Sullivan

Martin

et al. 2020

J Management Studies

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Infusing stakeholder agency theory with insights from behavioural agency theory, we describe a frame-dependent relationship between CEO stock option incentives and tax avoidance. Our theoretical framework highlights the role of competing shareholder demands in providing a salient reference point for a CEO contemplating the implications of tax avoidance for their stock option wealth. In a study of 2,573 publicly listed U.S. firms between 1993 and 2014, we show that the implications of CEO stock option incentives are contingent on whether the firm's effective tax rate is anticipated to be below or above the tax rate of peer firms -an outcome that the CEO can cast as balancing stakeholder demands. Consistent with our theoretical reasoning, we also show that, both above and below this reference point, the implications of option incentives for corporate tax avoidance are amplified by the level of activist institutional ownership and attenuated by the CEO's ability to unwind their bond with shareholders through hedging. In doing so, our study offers an impetus for a broader stakeholder approach to governance research examining CEO incentive alignment.

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“…[Insert Figure 1 here] Categories 1 and 2 comprise ETR conditions which are favourable from a shareholder-oriented perspective. Category 1 abstracts from concerns of other stakeholders and can be proxied by the conditions "smooth ETRs" (McGuire et al 2013, Demeré et al 2019 and "ETRs close to the industry average" (Hoopes et al 2017, Inger et al 2018, Armstrong et al 2019. Shareholders as well as other stakeholders generally prefer predictable ETRs and ETRs in a "reasonable" range.…”

mentioning

confidence: 99%

When Do Firms Highlight Their Effective Tax Rate?

2020

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Acknowledgements: We thank the participants of the 2013 arqus Doctoral Workshop and participants at the 2018 European Accounting Association conference for their valuable comments on an earlier version of this paper. We are grateful to the Baetge research team for sharing the annual report quality data and thank Fabian Peitz and Isis Swoboda for excellent research assistance. We gratefully acknowledge funding provided by the Deutsche Forschungsgemeinschaft (DFG, German Research Foundation)-Project-ID 403041268-TRR 266.

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Strategic reactions in corporate tax planning

Cited by 73 publications

References 51 publications

Corporate Social Responsibility Disclosure: Tax Agresiveness Indication?

Corporate Social Responsibility Disclosure: Tax Agresiveness Indication?

Stakeholder Agency Relationships: CEO Stock Options and Corporate Tax Avoidance

When Do Firms Highlight Their Effective Tax Rate?

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