Transparency, Information Shocks, and Tax Avoidance

Kerr, Jon N.

doi:10.2139/ssrn.2761140

Cited by 10 publications

(16 citation statements)

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“…5 Using OLS regressions we test whether the presence of a GAAR results in reduced tax avoidance and use, as our dependent variable, the amount of corporate tax revenues collected as a percentage of GDP (obtained from the OECD website). This test is similar in spirit and intent to the aggregate test found in Kerr (2018a) which shows that increased country-level opacity results in an increase in the country-level corporate tax revenues collected. We follow Kerr (2018a) Before presenting results of this test, we present descriptive statistics for the variables used in this test.…”

Section: Effect On Tax Revenue Collections In the Aggregatementioning

confidence: 70%

“…This test is similar in spirit and intent to the aggregate test found in Kerr (2018a) which shows that increased country-level opacity results in an increase in the country-level corporate tax revenues collected. We follow Kerr (2018a) Before presenting results of this test, we present descriptive statistics for the variables used in this test. These descriptive statistics can be found in limiting the sample, we see this as evidence of a lack of power in the tests when using the reduced sample and thus use the full sample.…”

Section: Effect On Tax Revenue Collections In the Aggregatementioning

confidence: 70%

“…Second, another interpretation is that the enactment of a GAAR creates substantial tax-and enforcementrelated concern for the average firm such that that firm responds to the increase in uncertainty and risk by decreasing tax avoidance. Since the first interpretation requires the average firm in our sample be engaged in aggressive tax avoidance behaviors and since extant empirical evidence suggests this is unlikely (see Hanlon and Slemrod 2009, Frank et al 2009, Armstrong et al 2012, Kerr et al 2017, Kerr 2018a, we interpret this result following the second.…”

Section: Introductionmentioning

confidence: 88%

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The General Anti-Avoidance Rule

Kerr

Cowx

2019

SSRN Journal

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The general anti-avoidance rule, or GAAR, is an enforcement mechanism that gives the taxing authority of a country broad power to deny a taxpayer tax benefits associated with any transaction.Although a GAAR being enacted within a country is becoming increasingly more common, the presence of a GAAR is generally overlooked and thus its effect left unstudied. In this paper we provide an initial investigation by studying the effect that a GAAR within a country has on corporate tax avoidance behaviors. Using an indicator for the enactment of a GAAR within a specific country, we find a statistically and economically significant increase in aggregate tax collections and a statistically and economically significant decrease in firm-level tax avoidance. Additional analyses show that the firm-level results are strongest for firms with higher levels of tax avoidance, for countries with lower levels of tax enforcement prior to the implementation of a GAAR, and for countries where the burden of proof lies, at least partially, with the taxpayer. In final analyses, we find that the GAAR is associated with a decrease in the volatility of reported ETRs. Variable Description and Data Source Book ETR The ratio of total tax expense (TXT) to pre-tax income (PI). Book ETR Vol One-year lagged five-year rolling standard deviation of tax avoidance, where tax avoidance is computed by Book ETR. Book Ratio Book ETR / CSTR Book Ratio Vol One-year lagged five-year rolling standard deviation of tax avoidance, where tax avoidance is computed by Book Ratio. Book Spread Book ETR-CSTR Book Spread Vol One-year lagged five-year rolling standard deviation of tax avoidance, where tax avoidance is computed by Book Spread. CorpTaxRev Country-year level measure of total corporate income, profits, and capital gains taxes, scaled by country GDP.

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Section: Effect On Tax Revenue Collections In the Aggregatementioning

confidence: 70%

Section: Effect On Tax Revenue Collections In the Aggregatementioning

confidence: 70%

Section: Introductionmentioning

confidence: 88%

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The General Anti-Avoidance Rule

Kerr

Cowx

2019

SSRN Journal

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“…, ‫إلي‬ ‫ما‬ ‫وىو‬ ‫يبية,‬ ‫الضر‬ ‫المدفوعات‬ ‫تدنية‬ ‫في‬ ‫تسيم‬ ‫يبي‬ ‫الضر‬ ‫التجنب‬ ‫ممارسات‬ ‫أن‬ ‫ثم‬ ‫ومن‬ ‫النقدية,‬ ‫وتدفقاتيا‬ ‫الشركة‬ ‫بحية‬ ‫ر‬ ‫عمي‬ ‫إيجابا‬ ‫ينعكس‬ ‫إضافة‬ ‫المالك‬ ‫وثروة‬ ‫لمشركة‬ ‫قيمة‬ , ‫األسيم‬ ‫حممة‬ ‫أو‬ , ‫الشركة.‬ ‫مخاطر‬ ‫عمي‬ ‫تؤثر‬ ‫أن‬ ‫دون‬ ‫اآلخر‬ ‫البعض‬ ‫خمص‬ ‫بينما‬ (Donohoe and Knechel, 2014;Col, 2017;Inger et al, 2018;Chung et al, 2019) , (Gallemore, et al, 2014;Kerr, 2019) . (Waegenaere et al, 2006;Paquette, 2006;Klassen et al, 2017) .…”

Section: ‫البحث‬ ‫ممخص‬unclassified

“…(Grubert and Mutti, 1991;Klassen et al, 1993) . (Guenther et al, 2017;Firmansyah and Muliana, 2018 (Dhaliwal et al, 2005;Heitzman, and Ogneva, 2015;Blaufus et al, 2016;Rachmawati and Martani, 2017;Cook et al, 2017;Khurana et al, 2018;Inger et al, 2018 (Kim et al, 2011;Gallemore, et al, 2014;Ljungqvist et al, 2016;Guenther et al, 2017;Feller and Schanz, 2017;Bird and Davis-Nozemack, 2018;Francis et al, 2019;Kerr, 2019…”

Section: ‫البحث‬ ‫ممخص‬mentioning

confidence: 99%

أثر ترکز الملکیة وحجم مکتب المراجعة علی علاقة ممارسات التجنب الضریبی بعوائد الأسهم ومخاطر الشرکات- دراسة تطبیقیة علی الشرکات المقیدة بالبورصة المصریة

یوسف¹

2019

الفکر المحاسبى

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This study examines Firstly, the effect of tax avoidance practices on stock returns and Firm risks, and the moderating role of Ownership Concentration and Audit Firm Size, using sample of 330 observations of 55 non-Financial Listed Egyptian firms for the period 2013:2018. Secondly, re-test through additional analysis the effect of the ownership concentration and audit firm size as two control variables in addition to the firm size, leverage, working capital, and sales as other control variables. Finally, a sensitivity analysis was conducted to examine the effect of different tax avoidance measurement method on the main relationships. The results indicate that tax avoidance practices negatively affect stock Returns but positively affects Firm risks. And the results did not support the moderating role of ownership concentration and Audit Firm Size neither for tax avoidance and returns relationship nor tax avoidance and firm risks. The additional analysis reveals that both ownership concentration and Audit Firm Size are significant as control variables in both main relationships regression models, and It was found that the other control variables increased the explanatory Power of them. The sensitivity analysis results refers that changing the method of measuring tax avoidance affects the significance of the main relationships.

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Country-level governance, accounting standards, and tax avoidance: a cross-country study

Zeng

2019

ARA

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Purpose The purpose of this paper is to examine the impact of country-level governance and accounting standards on corporate tax avoidance. Design/methodology/approach This paper is an empirical work using a sample of listed companies from 36 countries. Findings This paper finds that firms resident in countries with stronger country-level governance engage in less tax avoidance. Aspects of stronger country-level governance include higher government effectiveness and regulatory quality, and stronger enforcement of law and control of corruption. This paper also finds that firms adopting international accounting standards (IFRS) engage in less tax avoidance than those using local accounting standards. Further examination of the effect of interactions between country-level governance and the adoption of IFRS on tax avoidance finds that there is a substitute relationship between country-level governance and the adoption of IFRS. Social implications This study has significant implications for policy makers, corporate management and academics. It documents that when a country implements governance targeting improving government effectiveness, enhancing regulatory quality, strengthening enforcement of laws and controlling corruption, this will lead to less corporate tax avoidance. It also shows that the adoption of IFRS will reduce corporate tax avoidance, probably by enhancing accounting quality and disclosure, and that the adoption of IFRS provides a bond mechanism in reducing tax avoidance in countries with weak governance. Originality/value This paper is the first study to examine the impact of country-level governance on tax avoidance at the corporate level. It is also the first study to examine how country-level governance interplays with IFRS in shaping firms’ tax avoidance activities.

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Transparency, Information Shocks, and Tax Avoidance

Cited by 10 publications

References 0 publications

The General Anti-Avoidance Rule

The General Anti-Avoidance Rule

أثر ترکز الملکیة وحجم مکتب المراجعة علی علاقة ممارسات التجنب الضریبی بعوائد الأسهم ومخاطر الشرکات- دراسة تطبیقیة علی الشرکات المقیدة بالبورصة المصریة

Country-level governance, accounting standards, and tax avoidance: a cross-country study

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