Tax Avoidance, Managerial Ability, and Investment Efficiency

Khurana, Inder K.; Moser, William J.; Raman, K. K.

doi:10.1111/abac.12142

Cited by 66 publications

(93 citation statements)

References 61 publications

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“…As a result, BTD can capture non-conforming tax avoidance schemes by companies, unlike ETR (Hanlon & Heitzman, 2010;Gebhart, 2017). Accordingly, a positive BTD value indicates a greater level of corporate tax avoidance (Mary Margaret Frank, Luann J. Lynch, 2009;Khurana et al, 2018). While several studies have found that corporate tax sheltering activities did influence BTD [e.g., (Ryan J.…”

Section: Literature Reviewmentioning

confidence: 99%

Corporate Tax Avoidance of Malaysian Public Listed Companies: A Multi-Measure Analysis

2021

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Objective - Even with corporate tax avoidance being extensively studied, it is still lacking a single universal measurement. There is also a dearth of studies focusing on developing economies such as Malaysia. This study, therefore, analyses the correlations between effective tax rates (ETRs) and book-tax differences (BTDs), which are the most commonly used measures of corporate tax avoidance on Malaysian listed companies for ten years. Methodology/Technique - This study performs distribution, frequency, and correlation analyses on the ETRs and BTDs of the Top 300 companies listed in the Main Market of Bursa Malaysia based on market capitalization. The data used spans a ten-year period from 2010 to 2019. Findings - The results of the distribution, frequency, and correlation analyses show that both these measures are closely related gauges of corporate tax avoidance. Novelty - The results of this study provide further statistical proof that ETR and BTD measures of corporate tax avoidance are closely related. Its utilization of data from listed companies in Malaysia expands the current body of literature by addressing corporate tax avoidance practice in a developing economy. By concentrating on both ETR and BTD measures, this study's analysis is consistent with the broad continuum of corporate tax avoidance spectrum and significantly reduces the risk of warping its determination of tax avoidance level. Type of Paper - Empirical. Keywords: Cash ETR; corporate tax avoidance; GAAP ETR; permanent BDT; total BTD. JEL Classification: G30, H25, H26, M40. URI: http://gatrenterprise.com/GATRJournals/AFR/vol6.1_1.html DOI: https://doi.org/10.35609/afr.2021.6.1(1) Pages 44 – 53

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Section: Literature Reviewmentioning

confidence: 99%

Corporate Tax Avoidance of Malaysian Public Listed Companies: A Multi-Measure Analysis

2021

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“…He also tested other forms of rent extraction like over‐investment or higher levels of executive compensation and found no evidence of rent extraction. Khurana, Moser, and Raman (2018) document a positive relationship between tax avoidance and overinvestment only for firms with high managerial ability.…”

Section: Literature Reviewmentioning

confidence: 99%

Tax avoidance and over‐investment: The role of the information environment

Feng

2020

J Corp Accounting Finance

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We investigate whether the association between tax avoidance and over‐investment is moderated by a firm's information environment. Prior research (Blaylock, 2016) finds no association between tax avoidance and over‐investment, but the study did not consider the impact of financial reporting quality (FRQ). It seems likely that FRQ is a moderating variable because Balakrishnan, Blouin, and Guay (2012) find that a firm's information environment is affected by tax planning while Biddle and Hilary (2006) find that FRQ is negatively associated with investment. We find that tax avoidance is positively associated with over‐investment when the information environment is weak, and that having a richer information environment mitigates this association. Our results are robust across multiple measures of tax avoidance and multiple proxies for the quality of the information environment. In addition, our results hold after propensity score matching, controlling for governance and the firm's internal resources, partitioning on managerial ability, and in a change analysis. These findings highlight the important role of financial information in corporate investment behavior and enhance our understanding of the link between tax avoidance and agency costs.

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“…Managerial Characteristics (Salehi et al, 2020;Aliahmadi et al, 2016) (Adut et al, 2019Huang & Sun, 2017;Siao & Chou, 2015) (Rahman et al, 2020;Salehi et al, 2020;Gan, 2019;Ruhs & Østerås, 2019;Akbari et al, 2018;Khurana et al, 2018;Lee et al, 2018;Nurfauzi & Firmansyah, 2018;Habib, 2017) 129 (…”

Section: Ceo's Managerial Abilitymentioning

confidence: 99%

قیاس تأثیر القدرة الإداریة للمدیرین التنفیذیین على نغمة الإفصاح المحاسبى وسیاسة التوزیعات النقدیة: دلیل تطبیقى من البورصة المصریة

حسين¹

2020

الفکر المحاسبى

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This study aimed to measure the effect of the degree of CEO's managerial ability according to the managerial ability score presented by (Demerjian, et al., 2012), on accounting disclosure tone in financial reporting (which expressed in three different descriptive proxies, 1 st accounting disclosure tone for good news (positive or optimistic tone), 2 nd accounting disclosure tone for bad news (negative or pessimistic tone), and 3 rd accounting disclosure tone for net news), and on cash dividends policy (which measured by three alternative proxies, 1 st the firm's decision to pay cash dividends during the year, 2 nd cash dividends on assets ratio, and 3 rd cash dividends returns), by taking into account 129 non-financial companies' listed in the egyptian stock exchange, over the period of 2014 to 2018. The Binary Logistic Regression Analysis and the Fixed Effects Model (as one of the longitudinal regression models for Panel Data) were adopted to examine the research hypotheses using SPSS (ver.24) and E-Views (ver.10) programs. The research concluded to several findings, most important of which, that the degree of CEO's managerial ability of the companies under study have increased. The study provided statistical evidences of which, having a significant effect of the degree of CEO's managerial ability on accounting disclosure tone in financial reporting, as it was found that there was a positive significant effect of the degree of CEO's managerial ability on accounting disclosure tone for good and net news, and a negative significant effect on accounting disclosure tone for bad news. The study also provided statistical evidences that, a positive significant effect of the degree of CEO's managerial ability on cash dividends on assets ratio, and cash dividends returns, and no significant effect on firm's decision to pay cash dividends during the year.

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Tax Avoidance, Managerial Ability, and Investment Efficiency

Cited by 66 publications

References 61 publications

Corporate Tax Avoidance of Malaysian Public Listed Companies: A Multi-Measure Analysis

Corporate Tax Avoidance of Malaysian Public Listed Companies: A Multi-Measure Analysis

Tax avoidance and over‐investment: The role of the information environment

قیاس تأثیر القدرة الإداریة للمدیرین التنفیذیین على نغمة الإفصاح المحاسبى وسیاسة التوزیعات النقدیة: دلیل تطبیقى من البورصة المصریة

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