قیاس أثر التجنب الضریبی للشرکات على تکلفة حقوق الملکیة فی ضوء نظریة الوکالة: دراسة عملیة فی بیئة الأعمال المصریة

Abstract

This study aims to measure the impact of corporate tax avoidance on the cost of equity (COE) in light of the agency theory in the Egyptian business environment as a model for the emerging countries' economies. To achieve this, aim the researcher examined the annual reports of a sample of corporations registered in the Egyptian stock market equals (64) non-financial firms listed on EGX100 index during the period from 2015 to 2019, with a total of observations of (320) observation to test the two study hypotheses. The researcher measured the corporate tax avoidance using three measures: Accounting Effective Tax Rate (AccountingETR), Current Effective Tax Rate (CurrentETR), Book-Tax Differences (BTD), in the main analysis, in addition to, the Long-Run Cash Effective Tax Rate (LRCashETR) in robustness checks, in order to give strength to the results of the study. The data were analyzed depending on the linear regression model according to the Ordinary Least Squares (OLS) method, and the Moderated Multiple Regression (MMR) model through program SPSS. The results indicate that there is a significant negative impact of corporate tax avoidance on the cost of equity, so the first hypothesis (H1) was accepted. The researcher also found that agency costs modify the relationship between corporate tax avoidance and the cost of equity. This result is consistent with agency theory, and the second hypothesis (H2) has been accepted. Based on that, the study recommends that firms operating in the Egyptian business environment should adhere to the income tax law, accounting standards and professional guidelines, and not engaging in tax avoidance practices, especially the aggressive one, aiming to reduce their tax. This is based on their social responsibility and the negative impacts of those practices on the state's public treasury.