The Effect of Family Ownership on the Relationship Between Aggressive Financial And Tax Reporting: Evidence From 10 Asian Countries

Abstract

This research aims to investigate the nature of the relationship between aggressive financial and tax reporting, and the influence of family ownership upon that relationship. Using crosscountry data of public companies listed on the stock exchanges of 10 countries in Asia, this study finds that aggressive financial reporting is associated positively with aggressive tax reporting and is reciprocal in nature, indicating that managers may no longer face a trade-off between the two. It is evident that managers have conducted aggressive financial and tax reporting simultaneously for the same reporting period. This aggressive reporting tendency is influenced by the characteristics of the company. Companies controlled by families tend to conduct less simultaneous aggressive financial and tax reporting for the same reporting period than others. These findings prove that the existence of family control in public companies does not encourage managers to conduct simultaneous aggressive financial and tax reporting in the same reporting period.

The effect of financial distress and earnings management on tax aggressiveness with corporate governance as the moderating variable

“…They concluded that financial distress had a positive relationship with tax avoidance and that the relationship between financial distress and tax avoidance had increased due to the global financial crisis. Warsini et al (2018) found that financial distress had a positive effect on tax aggressiveness. Based on the explanation above, the researchers predicted a positive influence between companies with financial distress and tax aggressiveness.…”