The impact of tax avoidance on the value of listed firms in Vietnam

Hà, Nguyễn Minh; Anh, Pham Tuan; Yue, Xiao‐Guang; Nam, Nguyen Hoang Phi

doi:10.1080/23311975.2021.1930870

Cited by 37 publications

(27 citation statements)

References 21 publications

(46 reference statements)

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“…This finding is consistent with Mandacı and Gumus (2010) who explain that too much managerial ownership could potentially lead managers to be more concerned about their own interests and the firm value decrease. However, the firm size has a positive impact on the firm value, which is in accordance with the outcomes of Minh Ha et al (2021) in Vietnam and Assidi et al (2016) and Nafti et al (2020) in Tunisia. The leverage has a negative effect on this value.…”

Section: Correlation Matrixsupporting

confidence: 81%

“…They have recently reported that the tax planning activity, as measured by the proxies based on reported accounting information, has a negative impact on the firm value. Minh Ha et al. (2021) also denote a negative effect of tax avoidance on the value of listed firms in Vietnam for the period of 2010–2018.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

“…The shareholders' perspective on tax avoidance has been the subject of extensive research over the past decade. In this context, empirical studies examining the impact of tax avoidance on the firm value have revealed mixed results (Desai and Dharmapala, 2006;Chen et al, 2010;Assidi et al, 2016;Christina, 2019;Minh Ha et al, 2021). To explain these mixed results, Tang (2019) examines how investors perceive the tax-avoidance behavior in an international setting (46 countries).…”

mentioning

confidence: 99%

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The interactive impact of tax avoidance and tax risk on the firm value: new evidence in the Tunisian context

Guedrib

Marouani

2023

ARA

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PurposeThe purpose of this study is to examine the interactive impact of tax avoidance and tax risk on the firm value.Design/methodology/approachThis study covers 290 observations on non-financial corporations listed on the Tunisian Stock Exchange for the period ranging from 2008 to 2020, using the multiple linear regression technique.FindingsThe results show that tax avoidance positively affects the firm value while tax risk has a negative influence on the company value. More importantly, tax risk moderates the positive impact of tax avoidance on the firm value. Accordingly, tax avoidance must be considered in conjunction with tax risk when studying the effect on the firm value. The findings of additional analyses indicate that when tax avoidance is associated with a high level of tax risk, it negatively affects the firm value. Thus, investors negatively rate the high-risk tax avoidance.Research limitations/implicationsThe major limitation of this study is that it focuses only on Tunisian listed companies since their financial statements are publicly available. Although the sample is relatively small due to the problem of data availability, it is satisfactory owing to the twelve-year sampling period (from 2008 to 2020). Research implications- The results obtained are of great interest to researchers as they should be more careful in simply using effective tax rates as a measure of risky or aggressive tax avoidance.Practical implicationsThe findings may signal the need for Tunisian firm managers to consider spillovers when adopting risky tax avoidance strategies and to implement a tax risk management policy within the firm. They are also substantial for Tunisian regulators to create requirements for reporting risky tax avoidance practices in the company annual reports to protect the investors’ rights and the society interest in general. The results are also useful for the investors who would like to make good decisions with respect to tax planning strategies. It is not enough to rely on the Effective Tax Rate (ETR) to judge whether or not tax planning is risky. Volatile ETRs, as a proxy of the tax risk, can be useful for them in decision-making.Social implicationsThe results also highlight that risky tax avoidance decreases the firm value, and thus confirm the negative repercussions that such behavior can have not only on the firm, but also on the society in general, as the corporate tax contributes to covering the State public expenditure. Hence, it is considered a general concern.Originality/valueThe present study differs from others in the existing literature. In fact, it examines the joint effect of tax avoidance and tax risk on the firm value for Tunisian listed companies which are characterized by the predominance of agency conflicts between major shareholders and minor ones. Therefore, the authors seek to investigate if small shareholders can penalize risky tax avoidance practices by decreasing the firm value.

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Section: Correlation Matrixsupporting

confidence: 81%

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

mentioning

confidence: 99%

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The interactive impact of tax avoidance and tax risk on the firm value: new evidence in the Tunisian context

Guedrib

Marouani

2023

ARA

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“…On the other hand, the tax avoidance strategy helps companies to have higher free cash in hand by transferring the cash from the government to the shareholders which then should increase the wealth and companies' performance (Khuong et al, 2020). The tax avoidance strategy is used by the company to finance the company activities and cover the liabilities, thereby increasing the company's performance and value (Minh Ha et al, 2021).…”

Section: Tax Avoidance and Companies' Performancementioning

confidence: 99%

“…According to Desai & Dharmapala (2009), the concept of tax avoidance, when viewed through the lens of agency theory, results in higher agency costs and an increase in the number of tools managers use to participate in predatory behaviour. From another perspective, tax avoidance is a strategy that allows businesses to have more free cash in hand by transferring funds from the government to companies (Khuong et al, 2020), which at the same time helps businesses finance their operations and pay off debt; hence, improving their performance (Minh Ha et al, 2021). As a result of the various instructions and controls over management and political opportunism, there is no definitive outcome of tax avoidance effect on companies' performance.…”

Section: The Role Of Political Connection On Tax Avoidance and Perfor...mentioning

confidence: 99%

Accounting Information Quality, Tax Avoidance and Companies' Performance: the Moderate Role of Political Connection

Alsmady

2022

J. Professional Business Review

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Purpose: This study examines the relationship between the accounting information quality, tax avoidance, and political connection in all Jordanian companies listed on Amman Stock Exchange. The current study also investigates the moderating effect of political connections on accounting information quality and company performance relationships. Further, the study examines the moderating effect of political connection on tax avoidance and company performance relationship. Theoretical framework: Political connections, tax avoidance, and the quality of accounting information affect a company's performance. According to the agency theory, reliable accounting information improves business performance and resources’ allocation efficiency by reducing information asymmetry. Additionally, the adverse effects of politics on companies are mitigated by accounting information quality. As a result, the cash flow is allocated effectively, improving the business's overall performance. Design/methodology/approach: The study uses the ordinary least squares (OLS) and applied moderated multiple regression (MMR). The sample data of this study includes 2266 company-years observations over the period 2008-2018 for all Jordanian companies listed on Amman Stock Exchange. The study compares accounting and market-based measurements of companies' performance (ROE, Tobin's Q). Findings: The study reveals consistent results among the measure. The results support the agency theory and found that accounting information quality reduces information asymmetry and positively affects companies' performance. Also, tax avoidance helps the companies to have more cash, and the results indicate a significant positive effect on companies' performance. In addition, the results support the agency theory argument and found that politics increase agency costs and negatively affect companies' performance. However, further analysis found that political connections sustain the positive effect of accounting information quality, which is a robust governance mechanism in Jordanian listed companies. Finally, the results found that tax avoidance with more political connections harms companies' performance. Research, Practical & Social implications: This study helps policymakers increase the governance mechanisms function in Jordanian listed companies. Also, the higher political relationship with the companies could be affected negatively on the Jordanian companies' achievement. Originality/value: The findings suggest several consequences for the fields of accounting and corporate governance. Additionally, the Middle East nations, including the Jordanian market, have had numerous economic difficulties that this study aids in resolving. For example, antagonistic political ties, information asymmetry, and insufficient allocation of financial resources.

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Corporate tax aggressiveness: evidence unresolved agency problem captured by theory agency type 3

Alkausar

Nugroho

Qomariyah

et al. 2023

Cogent Business & Management

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The impact of tax avoidance on the value of listed firms in Vietnam

Cited by 37 publications

References 21 publications

The interactive impact of tax avoidance and tax risk on the firm value: new evidence in the Tunisian context

The interactive impact of tax avoidance and tax risk on the firm value: new evidence in the Tunisian context

Accounting Information Quality, Tax Avoidance and Companies' Performance: the Moderate Role of Political Connection

Corporate tax aggressiveness: evidence unresolved agency problem captured by theory agency type 3

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