Corporate tax avoidance: a systematic literature review and future research directions

Abstract

PurposeThe increased interest among academicians to explore more about tax management behavior is evident in the literature on corporate tax avoidance. This paper aims to illustrate the multiple aspects that influence the tax avoidance behavior of corporations and its impacts through the systematic review method.Design/methodology/approachThis study used “Tax Avoidance” OR “Tax Aggressiveness” OR “Tax Planning” as search strings to extract the relevant literature from the Scopus database. This study is a comprehensive analysis of existing literature on corporate tax avoidance behavior. Further, the keyword network analysis has been used to find out the most explored and dry research areas related to corporate tax avoidance behavior using VOSviewer software.FindingsThe study finds that taxation decision is an important managerial decision. Managers adopt tax avoidance tactics to boost postax profits to meet the shareholders’ expectations, particularly of risk-averse shareholders, and sometimes for their benefit also. With this, this study also finds that firms’ characteristics, political connections and corporate social responsibility activities also impact taxation decisions. In addition, the study identifies that tax-avoiding behavior has a contradictory impact on firm value, market growth and corporate transparency disclosure decisions.Research limitations/implicationsThe study assists the researchers by providing a brief overview of tax avoidance behavior, for corporates in understanding the implications of tax avoidance, and for policymakers to fix the taxation loopholes and bring necessary tax reforms.Originality/valueThis study adds to the existing literature by providing a thorough overview of theories, determinants and outcomes of corporate tax avoidance behavior.

Determinants Of Profit Shifting Decision: Analysis Of Multinational Companies In Indonesia

“…The observation demonstrates that agency theory substantially impacts managers' tax planning decisions. Managers are motivated to increase after-tax income to satisfy the expectations of company owners, particularly shareholders, and occasionally for their benefit (Duhoon & Singh, 2023). As a result, managers employ tax avoidance strategies to alleviate the pressure they experience from these stakeholders.…”

The Impact of Financial Distress, Women on Boards and Profitability on Corporate Tax Avoidance

“…It has been observed that agency theory significantly affects managers' tax planning decisions. Managers experience pressure due to the demanding expectations of owners, particularly from risk-averse shareholders, and employ tax avoidance tactics to enhance post-tax earnings in order to meet the owner's expectations, and occasionally for their personal advantage (Duhoon & Singh, 2023).…”

Does Corporate Social Responsibility Expenditure Influence Tax Avoidance? Evidence from Tanzanian Listed Firms

“…Furthermore, Duhoon and Singh (2023) considered that specific firm characteristics play crucial roles in shaping the empirical landscape of the relationship between CSR expenditure and tax avoidance. For example, firm size, often associated with greater financial resources, introduces a potential dichotomy wherein larger firms may engage in more sophisticated tax planning but also face heightened scrutiny (Pranata et al, 2021).…”