The Effect of Tax Planning on Financial Performance in the Stock Exchange of Thailand

Abstract

This paper aims to examine the association of tax planning (hereafter called TP) on financial performance (hereafter called FP) in the Stock Exchange of Thailand during the year 2014-2016. The sample size, which excludes the financial sector, consists of 873 firm-years. The TP is measured by effective tax rate (hereafter called ETR) and the ratio of tax expenses to total assets (hereafter called TAX/ASSET), while the FP is measured by return on equity. This paper finds that the TP has both effects on the FP. The effect is positive when measured by ETR, while it is negative if measurement is TAX/ASSET. Regarding to control variables, the BIG4 auditors have positive effects on the FP. The results further indicate that the relationship between the FP and TP (measured by TAX/ASSET) is significantly negative for non-BIG4 auditors. The relationship is thus weak and insignificant for BIG4 auditors. The results are, therefore, useful to provide guideline for listed companies in managing capital and resources more efficiently.

The Influence of Tax Compliance and Earnings Quality on Financial Performance (Evidence from Indonesia and Thailand)

“…Based on these results, hypothesis 1 is accepted, meaning that tax compliance has an influence on the company's financial performance. With a negative coefficient, this study shows that tax compliance decreases the company's financial performance, this result is in accordance with previous research (De Schoenmaker et al, 2014;Thanjunpong & Awirothananon, 2019). These results indicate that some companies do not utilize industrial facilities provided by the government to compliant taxpayers, such as restitution and import facilities.…”

“…In addition, there are other facilities that help smooth the business of the company (Chude & Chude, 2015;Matarirano et al, 2019), such as restitution facilities and goods import facilities provided by the Indonesian government for compliant taxpayers to help improve financial performance. Even so, several other studies found a negative effect of tax on financial performance (De Schoenmaker et al, 2014;Thanjunpong & Awirothananon, 2019). Therefore, taxes are part of the company's profit and loss which has an impact on financial performance.…”

“…Tax is a corporate obligation in helping the country carry out development that is useful for the sustainability of the company's business. Several studies have found the negative effect of tax on financial performance because the tax burden can reduce the net profit of the business and this is what drives companies to not comply (De Schoenmaker, Van Cauwenberge, & Vander Bauwhede, 2014;Thanjunpong & Awirothananon, 2019). Other studies have found otherwise, company compliance with applicable provisions can improve company performance (Tariq & Abbas, 2013).…”

Tax Aggressiveness and Financial Performance of Listed Industrial Goods Firms in Nigeria

“…the findings of Kawor, & Kportorgbi, (2014);Thanjunpong, & Awirothananon, (2019) and contradict with that of Ogundajo, & Onakoya, (2016). Based on these, the null hypothesis one is rejected to signify the significant positive effect of GAAPETR on financial performance of listed industrial goods firms in Nigeria.…”

“…On the other hand, CASHETR has a negative significance effect on financial performance of listed industrial goods firms in Nigeria represented by ROA. This implies that the more firms increase their tax planning activities through CASHETR the lower their financial performance in terms of ROA this is in line with the findings of Kawor, & Kportorgbi, (2014); Thanjunpong, & Awirothananon, (2019) and contradict with that of Ogundajo, & Onakoya, (2016). Based on these findings, Hypothesis two is also rejected to imply that CASHETR has a significant negative effect on financial performance of listed industrial goods firms in Nigeria.…”