• Asia pacific journal of information systems
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• v.33 no.4
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• pp.1016-1035
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• 2023

Corporate tax avoidance has been the subject of international debate since the Enron scandal and has raised awareness of the need for greater transparency in financial markets. Efforts have been made to strengthen financial reporting requirements and meet the needs of investors and other stakeholders, including digitalization of financial reporting through Extensible Business Reporting Language (XBRL). This study examines the impact of the mandatory adoption of XBRL on corporate tax avoidance. We tested our predictions using a panel dataset of Indonesian firms listed on the IDX stock exchange. Based on available information in the DATASTREAM database covering the 2013-2017 period, we used two proxies for tax avoidance i.e., GAAP effective tax rate and current effective tax rate. We estimated multiple regression model including industry and year fixed effects. The results show that XBRL implementation has reduced corporate tax avoidance. These findings suggest that improving corporate transparency through XBRL could play a deterrent tool to corporate tax avoidance. The results of this study should be useful to tax authorities and accounting standard setters supporting the benefits of digitalizing financial reporting and continuing to complete XBRL taxonomies around the world.

• The Journal of Asian Finance, Economics and Business
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• v.8 no.3
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• pp.209-216
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• 2021

This study aim is to examine 1) the impact of corporate social responsibility disclosure and tax aggressiveness on firm value, 2) the impact of tax aggressiveness on firm value, and 3) the impact of corporate social responsibility on firm value. The sample of this study is 29 manufacturing companies listed on the Indonesia Stock Exchange. The period of research spans three years, from 2017 to 2019. The data is gathered from the annual report of the companies or website of companies and also the website from Indonesia Stock Exchange (IDX). This study uses Structural Equation Model with Partial Least Square. The research findings show that corporate social responsibility and tax aggressiveness have a negative and significant impact on firm value. The tax aggressiveness and firm value have a negative and significant impact. Corporate social responsibility has a positive and significant impact on firm value. This study uses the manufacturing sector, so that the findings of this study cannot be generalized to other sectors. Future research should explore other sectors such as mining, banking, etc. This study uses Effective Tax Rate (ETR) to measure tax aggressiveness. Further research should use another measurement, for instance, Current Effective Tax Rate (CETR).

• Journal of the Korea Academia-Industrial cooperation Society
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• v.18 no.1
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• pp.231-237
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• 2017

This study examines the relationship between voluntary information disclosure and the effective tax rate using Investor Relation (IR) as the proxy for the level of the firm's voluntary information disclosure, and effective corporate tax rate as the proxy for the level of tax avoidance. This study considers sample data from 1,396 firms listed on the Korea Composite Stock Price Index (KOSPI) from 2011-2014. The results of this study are as follows: Investor Relation (IR) had a positive correlation with effective corporate tax rate. This result got on with the result of additional analysis using extra measurement of effective corporate tax rate. According to these results, we expect that firms featuring greater voluntary information disclosure report enhanced business performance. This study contributes understanding how Investor Relation (IR) affects tax avoidance. We hope that this study can promote the development of capital markets and provide good news to investors for firms that have greater information disclosure.

• Journal of Distribution Science
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• v.21 no.6
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• pp.83-89
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• 2023

Purpose: This paper considers the issue of corporate tax avoidance (CTA) in the distribution of the tax burden across companies in Vietnam because the high level of CTA leads to unfairness in taxation. In particular, we aim for discussing the way to measure the extent of CTA and explore the determinants of CTA that reflect the features of high-tax risk-taking companies. Research design, data and methodology: The study investigates factors influencing the CTA behavior of legal entities listed on the Vietnam stock market between 2012 and 2018 to fill the empirical research vacuum in the country. we employ the dynamic GMM estimate method. Interestingly, CTA is considered through three approaches, including two effective-tax-rate-based methods and especially accrual earnings Results: The results highlight tax - accounting book disparities have significant effects on CTA. In addition, firm size, net asset value, debt leverage, and tax-accounting books are related to CTA. Conclusions: Tax avoidance is shown to have a positive correlation with financial distress in this case. The higher a company's capital adequacy ratio, the fewer tax avoidance opportunities it has. The paper draws some recommendations to deal with tax avoidance that improves the fairness in the distribution of the tax burden among corporations.

• The Journal of Asian Finance, Economics and Business
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• v.6 no.4
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• pp.45-52
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• 2019

The current study aims to investigate the relationship between tax avoidance and firm risk in an emerging market called Iran. The study population consists of 400 observations and 80 companies listed on the Tehran Stock Exchange (TSE) over a five-year period during 2012 and 2016. The statistical model used in this study is a multivariate regression model; besides, the statistical technique used to test the hypotheses proposed in this research is panel data. The results showed that low effective tax rate (tax avoidance) is more consistent than the higher effective tax rate. Moreover, there is no significant relationship between tax avoidance and future tax rate volatility. The findings also proved that lower effective tax rates are positively associated with future stock price volatility. This implies that since Iranian firms have many financial problems because of economic sanctions, they have a tendency to delay the disclosure of bad news about their firms. Needless to say, when a huge number of negative news reaches its peak, they immediately will enter the market and lead to a remarkable fluctuation in stock prices.

• The Journal of Asian Finance, Economics and Business
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• v.7 no.1
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• pp.81-90
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• 2020

We examine the effects of the complexity of tax-related information on the issuance of analyst's pre-tax income forecast and its value relevance. If analysts respond adequately to the needs of investors, they are more likely to provide a pre-tax income forecast. The provision of a pre-tax income forecast may indicate analysts' confidence in assessing the quality of earnings. Thus, investors, in turn, would be more confident in the analysts' pre-tax income forecasts if analysts provide both pre-tax and earnings forecasts than only the latter. Using a sample of Korean listed companies for 2005-2014, we find that analysts are likely to provide an implicit tax forecast when the volatility of the effective tax rate is low and the book-tax differences are small. We also find that when analysts provide pre-tax and after tax income forecasts, the value relevance for unexpected earnings increases. These results indicate that analysts are likely to be interested in corporate tax information and the complexity of tax-related information affects the availability of implicit tax forecasts. Furthermore, this study provides empirical evidence that when analysts provide both pre-tax and after tax income forecasts, investors have more confidence in analysts' earnings forecasts, which results in greater investors' responses.

• Journal of Korea Trade
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• v.27 no.1
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• pp.1-18
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• 2023

Purpose - Using a sample of Korean multinational corporations, we examine whether the relationship between tax risk and the implied cost of capital discriminates between the environmental, social, and corporate governance (ESG) of highly rated firms. Design/methodology - Firms with high tax risks have an increased uncertainty of future cash flows. Therefore, as the volatility of future cash flow increases, information asymmetry and the required return increases. Highly rated ESG firms can reduce information asymmetry, thereby weakening the positive relationship between tax risk and cost of capital. We employ the standard deviation of the cash effective tax rate as proxy of tax risk. We utilize the ESG rating data of the Korea Corporate Governance Service (KCGS). We use a PEG model, MPEG model, and GM model to measure the implied cost of capital. Findings - We find a positive association between the implied cost of capital and tax risk. The positive relationship between tax risk and the implied cost of capital weakens in highly rated ESG firms. Highly rated ESG firms prefer a stable tax position to invest after-tax cash flows into sustainable management. Therefore, the negative effects of tax risk on cost of capital can be reduced. Originality/value - This study provides empirical evidence that ESG activities can mitigate the negative impact of tax risk on the cost of capital for Korean multinational corporations. In a business environment where ESG activities are more important, the empirical results that ESG activities can reduce the corporate risk of Korean FDI companies are expected to provide implications for the ESG activities of multinational corporations.

• Journal of Korea Trade
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• v.25 no.5
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• pp.74-92
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• 2021

Purpose - Utilizing a large sample of Korean firms, this study examines international diversification impacts on corporate tax avoidance and whether firms affiliated with large business groups (known in Korean as "chaebol") reinforce the relationship between international diversification and tax avoidance. Design/methodology - This paper hypothesizes that 1) international diversification is likely to increase tax avoidance, 2) the positive effect of international diversification on tax avoidance is likely to be more pronounced for chaebol firms. We examine the hypotheses by using Korean firms listed in the Korean stock market between 2011 and 2016. We employ the number of foreign subsidiaries and the entropy index as proxies for international diversification and CASH ETR and GAAP ETR as proxies for tax avoidance. Findings - Our findings are summarized as follows. First, we have found that as firms are more internationally diversified, tax avoidance increases. It means that international diversification can be employed as a method of reducing the tax burden. Second, firms affiliated with chaebol are strengthened by the positive relation between international diversification and tax avoidance. It is interpreted that chaebol firms have more effective opportunities to reduce taxes than other firms. When entering foreign markets, they can share experience and resources to decrease taxation within the large business group. Originality/value - This study provides empirical evidence regarding the tax effect of international diversification. Unlike prior studies, international diversification is positively related to tax avoidance in Korea. In addition, we present additional evidence on the chaebol effects of international diversification on tax avoidance, in which they have an advantage to reduce taxes using transfer pricing through related party transactions, income shifting to low tax rate countries, and establishing subsidiaries in tax havens.

• Asia-Pacific Journal of Business
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• v.12 no.1
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• pp.195-208
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• 2021

Purpose - The primary objective of this paper is to empirically examine whether the engagement of socially responsible activities in corporations affect the tendency of tax-avoidance by using the sample of Korean companies. We are particularly interested in Chaebol-affiliated firms, which are a special type of Korean conglomerates. Design/methodology/approach - This study is based on a sample of 5,496 firm-year observation data from 2011 to 2017 by using the ESG ratings from the Korea Corporate Governance Service(KCGS), a ESG rating agency in Korea. For our analysis, the firms were separated into 1,547 Chaebol-affiliated firms and other 3,949 firms. All financial and firm data were extracted from Fn-guide, which provides financial information for Korean listed firms. Findings - We find that CSR is generally positively related to the effective tax rate, which indicates a lower level of tax avoidance for more socially responsible firms. In particular, a positive relationship of social score with GAAP ETR was observed. Research implications or Originality - We find that the positive relationship is robust to the group of chaebol and non-chaebol affiliates unlike extant literature.