The purpose of this paper is to examine the impact of the global financial crisis on corporate’ tax avoidance has been investigated. The statistical sample consists of 107 active firms in Tehran Stock Exchange between the years 2005 and 2014 which were selected through systematic removal. To test the research hypotheses linear regression test was used. Eviews software was used for data analysis and research hypotheses testing. The results of this study showed that there is a significant relationship between financial crisis and tax avoidance. There is a significant relationship between the global financial crisis and corporate tax avoidance and. There is no significant relationship between financial crisis and corporate’ tax avoidance in the global financial crisis.
{"title":"The Impact of the Financial Crisis on Tax Avoidance around the Global Financial Crisis in the Companies Accepted in Tehran Stock Exchange","authors":"Shaho Heidari Gandoman","doi":"10.2139/ssrn.3498639","DOIUrl":"https://doi.org/10.2139/ssrn.3498639","url":null,"abstract":"The purpose of this paper is to examine the impact of the global financial crisis on corporate’ tax avoidance has been investigated. The statistical sample consists of 107 active firms in Tehran Stock Exchange between the years 2005 and 2014 which were selected through systematic removal. To test the research hypotheses linear regression test was used. Eviews software was used for data analysis and research hypotheses testing. The results of this study showed that there is a significant relationship between financial crisis and tax avoidance. There is a significant relationship between the global financial crisis and corporate tax avoidance and. There is no significant relationship between financial crisis and corporate’ tax avoidance in the global financial crisis.","PeriodicalId":22313,"journal":{"name":"Tax eJournal","volume":"62 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"84065173","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-09-25DOI: 10.11575/SPPP.V12I0.69131
Bev Dahlby, Ergete Ferede
Shortly after its election in May 2019, the new Alberta government began fulfilling its promise to reduce the provincial corporate income tax (CIT) rate. The rate cut began in July 2019, when the government dropped the CIT rate from 12 to 11 per cent. The rate is scheduled to decline to 10 per cent on Jan. 1, 2020, followed by further one-percentage-point reductions in 2021 and 2022, bring the Alberta CIT rate down to eight per cent in 2022
{"title":"Simulating the Growth Effects of the Corporate Income Tax Rate Cuts in Alberta","authors":"Bev Dahlby, Ergete Ferede","doi":"10.11575/SPPP.V12I0.69131","DOIUrl":"https://doi.org/10.11575/SPPP.V12I0.69131","url":null,"abstract":"Shortly after its election in May 2019, the new Alberta government began fulfilling its promise to reduce the provincial corporate income tax (CIT) rate. The rate cut began in July 2019, when the government dropped the CIT rate from 12 to 11 per cent. The rate is scheduled to decline to 10 per cent on Jan. 1, 2020, followed by further one-percentage-point reductions in 2021 and 2022, bring the Alberta CIT rate down to eight per cent in 2022","PeriodicalId":22313,"journal":{"name":"Tax eJournal","volume":"7 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-09-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"81883865","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Shareholders of publicly-traded subsidiaries are potentially susceptible to expropriation (tunneling) by parent companies (Atanasov, Boone, and Haushalter, 2010). Recent study suggests that this could be particularly true among U.S. master limited partnerships (“MLPs”), where there is often substantial divergence between the control rights and cash-flow rights of parent firms, through their general partner interests (Atanassov and Mandell, 2018). Although the negative impact of tunneling on controlled firms is documented in the literature, little is known about the valuation consequences of tunneling for parent corporations. Changes to the MLP agency environment over the prior two decades—namely, the allowance of modifications to fiduciary duty and the introduction of incentive distribution rights—have likely increased the incentive and opportunity for tunneling, and provide a rich setting for addressing this question. Using a sample of MLPs formed from corporate assets, I examine the effects of changing tunneling incentives on stock returns of parent corporations announcing the formation of MLPs. I document significantly higher announcement period returns for MLP formations after these changes, which, in concert with additional testing, suggests that parent corporation shareholders benefit from the increased ability to tunnel the assets of the MLP.
上市子公司的股东可能容易受到母公司的征用(隧道)(Atanasov, Boone, and Haushalter, 2010)。最近的研究表明，这在美国主有限合伙企业(“mlp”)中尤其如此，通过其普通合伙人的利益，母公司的控制权和现金流权之间往往存在实质性分歧(Atanassov和Mandell, 2018)。虽然隧道效应对控股公司的负面影响在文献中有记载，但对母公司隧道效应的估值后果知之甚少。在过去的二十年里，MLP代理环境的变化——即允许对信义义务的修改和激励分配权的引入——可能增加了隧道挖掘的动机和机会，并为解决这个问题提供了丰富的环境。本文以公司资产形成的mlp为样本，考察了隧道激励变化对宣布成立mlp的母公司股票收益的影响。我发现，在这些变化之后，MLP地层的公告期回报率显著提高，这与额外的测试相一致，表明母公司股东受益于MLP资产隧道能力的增强。
{"title":"The Value of Tunneling: Evidence from Master Limited Partnership Formations","authors":"A. Mandell","doi":"10.2139/ssrn.2658373","DOIUrl":"https://doi.org/10.2139/ssrn.2658373","url":null,"abstract":"Shareholders of publicly-traded subsidiaries are potentially susceptible to expropriation (tunneling) by parent companies (Atanasov, Boone, and Haushalter, 2010). Recent study suggests that this could be particularly true among U.S. master limited partnerships (“MLPs”), where there is often substantial divergence between the control rights and cash-flow rights of parent firms, through their general partner interests (Atanassov and Mandell, 2018). Although the negative impact of tunneling on controlled firms is documented in the literature, little is known about the valuation consequences of tunneling for parent corporations. Changes to the MLP agency environment over the prior two decades—namely, the allowance of modifications to fiduciary duty and the introduction of incentive distribution rights—have likely increased the incentive and opportunity for tunneling, and provide a rich setting for addressing this question. Using a sample of MLPs formed from corporate assets, I examine the effects of changing tunneling incentives on stock returns of parent corporations announcing the formation of MLPs. I document significantly higher announcement period returns for MLP formations after these changes, which, in concert with additional testing, suggests that parent corporation shareholders benefit from the increased ability to tunnel the assets of the MLP.","PeriodicalId":22313,"journal":{"name":"Tax eJournal","volume":"65 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-09-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"84454555","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We study the effects of the 2017 Tax Cuts and Jobs Act (TCJA) on repurchases, leverage and investment. The TCJA generates tax windfalls through a repatriation tax cut and a corporate income tax cut. Using monthly repurchase data from SEC filings, we find the surge of repurchases after the TCJA is driven by the repatriation tax cut, and not the income tax cut. Executive incentives and employee ownership affect TCJA-triggered repurchases. Investments increase, primarily in response to the income tax cut and especially for capital-constrained, low-leverage, or profitable firms. Highly-levered firms with high income taxes reduce their leverage significantly.
{"title":"Stock Repurchases and the 2017 Tax Cuts and Jobs Act","authors":"Benjamin Bennett, Zexi Wang","doi":"10.2139/ssrn.3443656","DOIUrl":"https://doi.org/10.2139/ssrn.3443656","url":null,"abstract":"We study the effects of the 2017 Tax Cuts and Jobs Act (TCJA) on repurchases, leverage and investment. The TCJA generates tax windfalls through a repatriation tax cut and a corporate income tax cut. Using monthly repurchase data from SEC filings, we find the surge of repurchases after the TCJA is driven by the repatriation tax cut, and not the income tax cut. Executive incentives and employee ownership affect TCJA-triggered repurchases. Investments increase, primarily in response to the income tax cut and especially for capital-constrained, low-leverage, or profitable firms. Highly-levered firms with high income taxes reduce their leverage significantly.","PeriodicalId":22313,"journal":{"name":"Tax eJournal","volume":"108 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-08-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"87616696","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Do commercial property owners internalize increases in tax payments or pass these increases onto the renters of commercial space? To address this question, I develop a nonlinear mixed effect multilevel model that exploits cross-sectional and longitudinal variation in a panel of office rent and tax rate data for 1,300 office buildings across 93 Eastern Massachusetts municipalities over a 27 year period. Findings for the full set of buildings indicate a full-pass-through of a dollar increase in the tax payment to the renter of space. However, incidence for less centrally located buildings (outside a 5km radius from the Boston central business district) ranges from $0.52 to $0.67 for a dollar increase in the tax payment; incidence for more central buildings (within 5km from the Boston central business district) ranges from $1.06 to $1.39. An incidence greater than one is in line with theoretical hypotheses regarding general tax incidence within imperfectly competitive markets. Further, these findings indicate that elasticity of demand for office space relative to elasticity of supply may be larger in more decentralized locations.
{"title":"Commercial Property Tax Incidence: Evidence from Urban and Suburban Office Rental Markets","authors":"Lyndsey Rolheiser","doi":"10.2139/ssrn.2993371","DOIUrl":"https://doi.org/10.2139/ssrn.2993371","url":null,"abstract":"Do commercial property owners internalize increases in tax payments or pass these increases onto the renters of commercial space? To address this question, I develop a nonlinear mixed effect multilevel model that exploits cross-sectional and longitudinal variation in a panel of office rent and tax rate data for 1,300 office buildings across 93 Eastern Massachusetts municipalities over a 27 year period. Findings for the full set of buildings indicate a full-pass-through of a dollar increase in the tax payment to the renter of space. However, incidence for less centrally located buildings (outside a 5km radius from the Boston central business district) ranges from $0.52 to $0.67 for a dollar increase in the tax payment; incidence for more central buildings (within 5km from the Boston central business district) ranges from $1.06 to $1.39. An incidence greater than one is in line with theoretical hypotheses regarding general tax incidence within imperfectly competitive markets. Further, these findings indicate that elasticity of demand for office space relative to elasticity of supply may be larger in more decentralized locations.","PeriodicalId":22313,"journal":{"name":"Tax eJournal","volume":"84 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"78709568","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We examine how U.S. individuals respond to regulation intended to reduce offshore tax evasion. The Foreign Account Tax Compliance Act (FATCA) requires foreign financial institutions to report information to the U.S. government regarding U.S. account holders. We first document an average $7.8 billion to $15.3 billion decrease in equity foreign portfolio investment to the United States from tax‐haven countries after FATCA implementation, consistent with a decrease in “round‐tripping” investments attributable to U.S. investors’ offshore tax evasion. When testing total worldwide investment out of financial accounts in tax havens post‐FATCA, we find an average decline of $56.6 billion to $78.0 billion. We next provide evidence of other important consequences of this regulation, including increased expatriations of U.S. citizens and greater investment in alternative assets not subject to FATCA reporting, such as residential real estate and artwork. Our study contributes to both the academic literature and policy analysis on regulation, tax evasion, and crime.
{"title":"Transparency and Tax Evasion: Evidence from the Foreign Account Tax Compliance Act (FATCA)","authors":"L. De Simone, Rebecca Lester, Kevin S. Markle","doi":"10.2139/ssrn.3037426","DOIUrl":"https://doi.org/10.2139/ssrn.3037426","url":null,"abstract":"We examine how U.S. individuals respond to regulation intended to reduce offshore tax evasion. The Foreign Account Tax Compliance Act (FATCA) requires foreign financial institutions to report information to the U.S. government regarding U.S. account holders. We first document an average $7.8 billion to $15.3 billion decrease in equity foreign portfolio investment to the United States from tax‐haven countries after FATCA implementation, consistent with a decrease in “round‐tripping” investments attributable to U.S. investors’ offshore tax evasion. When testing total worldwide investment out of financial accounts in tax havens post‐FATCA, we find an average decline of $56.6 billion to $78.0 billion. We next provide evidence of other important consequences of this regulation, including increased expatriations of U.S. citizens and greater investment in alternative assets not subject to FATCA reporting, such as residential real estate and artwork. Our study contributes to both the academic literature and policy analysis on regulation, tax evasion, and crime.","PeriodicalId":22313,"journal":{"name":"Tax eJournal","volume":"21 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-07-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"90398207","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The Cameroon government imposes charges on citizens and corporate bodies called taxes in a bid to raise funds to pay for public services or facilities. It also uses taxation in the redistribution of wealth, and in encouraging or discouraging the consumption of some goods and services. In a circular No. 001/C/MINFI of 2 nd January 2018 by the Ministry of Finance of Cameroon, stringent measures were undertaken regarding the detection of “concealed” income or tax evasion, a phenomenon that stifles government efforts in realising its tax objectives. As a consequence, this study sought to investigate the causes of tax evasion in Cameroon and propose remedies. Data was collected through a survey carried out in the cities of Douala, Bafoussam and Bamenda, and analysed using the Ordinary Least Square (OLS) estimation technique. The empirical results were of positive and statistical significance and revealed that tax evasion in Cameroon is caused by high tax rates, complex and opaque tax laws, inefficient and corrupt tax inspectors, low income of taxpayers, evasion benefits outweighing detection penalties, poor perception of the judicial system and dissatisfaction with the quality and magnitude of public services and goods. Remedies proposed were that there should be a reduction and clear justification of tax rates, simplification of tax laws and effective education of taxpayers, creation of a more conducive business environment to boost business income, raise tax penalties, identify and deal with inefficient and corrupt tax authorities, liberate the judiciary to be truly independent to show proof of fairness and transparency in the treatment of tax matters and politicians being transparent and accountable for their decisions and use of public money. Tax ethics should be introduced and enforced in schools in order to build a culture of tax compliance in citizens, assiduity and honesty in tax authorities, and transparency and accountability in politicians and everyone in public offices. Keywords: Tax compliance, tax evasion, tax ethics, Cameroon. DOI : 10.7176/RJFA/10-14-08 Publication date :July 31 st 2019
{"title":"Tax Evasion in Cameroon: Causes and Remedies","authors":"Muka Samuel, Michael Forzeh Fossung","doi":"10.2139/ssrn.3433386","DOIUrl":"https://doi.org/10.2139/ssrn.3433386","url":null,"abstract":"The Cameroon government imposes charges on citizens and corporate bodies called taxes in a bid to raise funds to pay for public services or facilities. It also uses taxation in the redistribution of wealth, and in encouraging or discouraging the consumption of some goods and services. In a circular No. 001/C/MINFI of 2 nd January 2018 by the Ministry of Finance of Cameroon, stringent measures were undertaken regarding the detection of “concealed” income or tax evasion, a phenomenon that stifles government efforts in realising its tax objectives. As a consequence, this study sought to investigate the causes of tax evasion in Cameroon and propose remedies. Data was collected through a survey carried out in the cities of Douala, Bafoussam and Bamenda, and analysed using the Ordinary Least Square (OLS) estimation technique. The empirical results were of positive and statistical significance and revealed that tax evasion in Cameroon is caused by high tax rates, complex and opaque tax laws, inefficient and corrupt tax inspectors, low income of taxpayers, evasion benefits outweighing detection penalties, poor perception of the judicial system and dissatisfaction with the quality and magnitude of public services and goods. Remedies proposed were that there should be a reduction and clear justification of tax rates, simplification of tax laws and effective education of taxpayers, creation of a more conducive business environment to boost business income, raise tax penalties, identify and deal with inefficient and corrupt tax authorities, liberate the judiciary to be truly independent to show proof of fairness and transparency in the treatment of tax matters and politicians being transparent and accountable for their decisions and use of public money. Tax ethics should be introduced and enforced in schools in order to build a culture of tax compliance in citizens, assiduity and honesty in tax authorities, and transparency and accountability in politicians and everyone in public offices. Keywords: Tax compliance, tax evasion, tax ethics, Cameroon. DOI : 10.7176/RJFA/10-14-08 Publication date :July 31 st 2019","PeriodicalId":22313,"journal":{"name":"Tax eJournal","volume":"26 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"85552210","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Antonio Martinez, José Enrique Teixeira Reinoso, R. Antônio, Rogiene Batista dos Santos
This study investigated the relationship between the use of financial derivatives by non-financial corporations and tax aggressiveness in Brazil. In research on the American market, evidence was identified that non-financial entity users of financial derivatives were more tax aggressive. However, there is no reason to assume that this behavior is replicated in the Brazilian market, since tax legislation does not offer the same economic incentives, i.e., since it imposes limits on the tax deductibility of losses with these financial instruments, except in derivatives’ well-documented and proven use as a hedge tool. To verify this point, companies were classified into users and non-users of first-generation financial derivatives, and associated this classification with tax aggression metrics. The study focus was 384 non-financial companies listed on the B3 in the period from 2005 to 2015. The results of regression analysis using a probit estimate have pointed, in a distinctly different way than the American reality, that the most tax aggressive companies tend to use fewer financial derivatives. Nevertheless, when the use of derivative instruments as a hedge was controlled, it was found that when a company adopts hedge accounting, it is more likely it will be more tax aggressive. The result is presumably explained by the Brazilian tax treatment that authorizes the deductibility of losses, regardless of earnings, when using the derivative as a hedge.
{"title":"Financial Derivatives, Hedge Accounting and Tax Aggressiveness in Brazil","authors":"Antonio Martinez, José Enrique Teixeira Reinoso, R. Antônio, Rogiene Batista dos Santos","doi":"10.2139/ssrn.3406683","DOIUrl":"https://doi.org/10.2139/ssrn.3406683","url":null,"abstract":"This study investigated the relationship between the use of financial derivatives by non-financial corporations and tax aggressiveness in Brazil. In research on the American market, evidence was identified that non-financial entity users of financial derivatives were more tax aggressive. However, there is no reason to assume that this behavior is replicated in the Brazilian market, since tax legislation does not offer the same economic incentives, i.e., since it imposes limits on the tax deductibility of losses with these financial instruments, except in derivatives’ well-documented and proven use as a hedge tool. To verify this point, companies were classified into users and non-users of first-generation financial derivatives, and associated this classification with tax aggression metrics. The study focus was 384 non-financial companies listed on the B3 in the period from 2005 to 2015. The results of regression analysis using a probit estimate have pointed, in a distinctly different way than the American reality, that the most tax aggressive companies tend to use fewer financial derivatives. Nevertheless, when the use of derivative instruments as a hedge was controlled, it was found that when a company adopts hedge accounting, it is more likely it will be more tax aggressive. The result is presumably explained by the Brazilian tax treatment that authorizes the deductibility of losses, regardless of earnings, when using the derivative as a hedge.","PeriodicalId":22313,"journal":{"name":"Tax eJournal","volume":"20 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-06-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"73701128","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-06-12DOI: 10.32721/CTJ.2019.67.2.FON
M. Smart
In this article, Michael Smart presents evidence on the evolution of top tax rates and tax progressivity since 1982. While top tax rates have recently increased substantially, the impact of these changes on redistribution through the tax system has been rather small to date. Smart suggests some possible explanations for this finding.
{"title":"Finances of the Nation: Taxation of Top Incomes in Canada — Recent Developments in Rates and Redistribution","authors":"M. Smart","doi":"10.32721/CTJ.2019.67.2.FON","DOIUrl":"https://doi.org/10.32721/CTJ.2019.67.2.FON","url":null,"abstract":"In this article, Michael Smart presents evidence on the evolution of top tax rates and tax progressivity since 1982. While top tax rates have recently increased substantially, the impact of these changes on redistribution through the tax system has been rather small to date. Smart suggests some possible explanations for this finding.","PeriodicalId":22313,"journal":{"name":"Tax eJournal","volume":"1 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-06-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"89938432","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We explore the relation between foreign institutional ownership and corporate tax planning. Using a comprehensive sample of international publicly listed firms, we find the presence of foreign institutional investors plays a disciplinary role by leading corporate managers to engage in a level of tax planning consistent with the average tax position of the company’s country and industry peers. Our findings hold for larger firms only, consistent with a political cost theory of tax planning. We address endogeneity concerns by exploiting multiple sources of exogenous variation in foreign institutional ownership. Our results overall suggest that foreign institutions act as effective monitors of managerial tax-related activity.
{"title":"Corporate Tax Planning and Political Costs: Peer Effects of Foreign Institutional Ownership","authors":"April Klein, Simone Traini, G. Voulgaris","doi":"10.2139/ssrn.3400881","DOIUrl":"https://doi.org/10.2139/ssrn.3400881","url":null,"abstract":"We explore the relation between foreign institutional ownership and corporate tax planning. Using a comprehensive sample of international publicly listed firms, we find the presence of foreign institutional investors plays a disciplinary role by leading corporate managers to engage in a level of tax planning consistent with the average tax position of the company’s country and industry peers. Our findings hold for larger firms only, consistent with a political cost theory of tax planning. We address endogeneity concerns by exploiting multiple sources of exogenous variation in foreign institutional ownership. Our results overall suggest that foreign institutions act as effective monitors of managerial tax-related activity.","PeriodicalId":22313,"journal":{"name":"Tax eJournal","volume":"3 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"87814762","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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