The Effect of Corporate Diversification on Tax Aggressiveness in Brazilian Companies

Abstract

Objective: To verify whether firms that operate in several different business sectors are more tax aggressive in comparison to firms that operate in a single or a few segments. Method: The study analyzes a sample of firms listed in the Brazilian stock exchange B3 in the period from 2010 to 2017. To verify the existence of a relationship between diversification and tax aggressiveness, a data panel regression model with fixed effect of company and year was used and additionally the logit model. To measure tax aggressiveness, it was used ETR (effective rate of taxation) and ETR long (long-run effective tax rates). Originality/relevance: This type of research is unprecedented in Brazil, being a point not yet explored in the literature, in view of its peculiarities of a developing country. Relevant to define the effect of diversification on tax aggressiveness. Results: It was observed that the more companies are diversified, the lower the probability of having low tax aggressiveness, or that more diversified companies are more likely to be more aggressive, compared to companies with only one segment. Therefore, the results indicate that among companies with segments, the more segments, the more aggressive the company. Theoretical/Methodological contributions: A better understanding of the phenomenon of tax aggressiveness, causes and determinants, having implications for financial statement users, in particular tax regulators.

Agressividade tributária e risco de fraudes contábeis em empresas listadas na B3

“…Existem diversos estudos investigando a relação entre a agressividade tributária e o controle interno (Martinez, Ribeiro, et al, 2019), o controle acionário (Martinez & Motta, 2020), à quantidade de segmentos (Martinez & Rodrigues, 2020), os incentivos fiscais (Alves et al, 2021), o nível de endividamento (Fonseca et al, 2021), o regime tributário (Alves et al, 2020;Silva et al, 2022;Broietti et al, 2022), o mercado regulado (França & Bezerra, 2022), entretanto, poucos estudos analisaram especificamente à fraude nas demonstrações contábeis (Lennox et al, 2013;Hashim et al, 2016;Cao, 2022).…”

An Analysis of Firm Complexity and Tax Aggressiveness of Listed Deposit Money Banks in Nigeria and South Africa

“…Thus, sustaining the financial health of DMBs is considered paramount just as governments desire to maximise their full tax potential. To this extent, most previous studies (Ilaboya, Obasi and Izevbekhai, 2017;Martinez and Rodrigues, 2019;Ogbeide, 2017;Zemzem and Ftouhi, 2013) suggested that varying firm attributes (such as firm size, firm age, profitability, leverage, liquidity, auditor type, firm complexity and ownership structure) played important roles in determining firms" tax management strategies as well as the level of firms" tax aggressiveness. Concerning the above mentioned firm attributes of deposit money banks (DMBs) in the two countries, there are staggering noteworthy heterogeneities.…”

An Empirical Evaluation of Tax Aggressiveness on Operating Cash Flows of Sampled Nigerian Banks

“…Generally, tax-aggressive strategies are used to lower taxes, boost after-tax profits per share, and enhance cash on hand for shareholders (Lanis & Richardson, 2011). Since doing so shifts money accruable to the government to them and supports the company's purpose of maximizing shareholder value, shareholders typically prefer that management take a more aggressive tax stance (Martinez & Rodrigues, 2020). Even Nevertheless, many businesses use tax evasion as a means of lawfully reducing their tax responsibilities, despite the fact that the National Tax Policy of Nigeria was created in 2017 to lessen the impact of tax system deficiencies in Nigeria.…”