• 아태비즈니스연구
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• 제9권3호
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• pp.71-82
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• 2018

This study verifies whether the sustainable tax strategy provides unique information on earnings persistence and brings about the difference of value relevance of accounting information. Sustainability is measured by the 5-year coefficient of variation in cash ETR, such as in McGuire et al.(2013), which measures variability in long-term performance of tax avoidance. The value relevance of accounting information in this study is modified by the Ohlson model(1995), which explains the value of the firm by using accounting information such as net assets and net income and other non-accounting information. The samples of this study are the firms listed on the securities market from 2004 to 2015 and the final samples are 3,133 firm-year. The results of this empirical analysis show that the value relevance of accounting information increases as firms have long-term and sustainable tax strategies. Most of the prior studies on tax strategies have examined the tax minimization strategy that minimizes the tax cost. However, this study is different in that the sustainability of the tax strategy affects the value relevance of accounting information. The results of this study will be useful for the users to make decision using the value relevance of accounting information.

• The Journal of Asian Finance, Economics and Business
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• 제9권2호
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• pp.103-112
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• 2022

This study aims to obtain empirical evidence regarding the link between tax avoidance (TA) and the readability of financial statements. This is a quantitative research using Ordinary Least Squares regression analysis which is then processed using STATA 14.0. A total of 278 companies listed on the Indonesia Stock Exchange during the period 2017-2019 is the data of this study. In detecting TA in a company, this study uses the ETR and CashETR and for the measurement of financial statement readability, this study uses gunning fog index and length of the document. The findings of this study suggest that tax avoidance and clear financial statements are mutually exclusive in the sense that when tax avoidance is practiced, companies will tend to conceal the information conveyed by financial statements. In other words, it is concluded that the more a company engages in tax avoidance, the lower the readability of the company's financial statements. This study provides in-depth evidence that tax avoidance is indirectly related to the disclosure of information by the company. Users of financial statements will realize that the company seeks to make disclosures that are in their best interests to avoid their tax avoidance strategy being detected.

• Journal of Korea Trade
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• 제25권5호
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• pp.74-92
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• 2021

Purpose - Utilizing a large sample of Korean firms, this study examines international diversification impacts on corporate tax avoidance and whether firms affiliated with large business groups (known in Korean as "chaebol") reinforce the relationship between international diversification and tax avoidance. Design/methodology - This paper hypothesizes that 1) international diversification is likely to increase tax avoidance, 2) the positive effect of international diversification on tax avoidance is likely to be more pronounced for chaebol firms. We examine the hypotheses by using Korean firms listed in the Korean stock market between 2011 and 2016. We employ the number of foreign subsidiaries and the entropy index as proxies for international diversification and CASH ETR and GAAP ETR as proxies for tax avoidance. Findings - Our findings are summarized as follows. First, we have found that as firms are more internationally diversified, tax avoidance increases. It means that international diversification can be employed as a method of reducing the tax burden. Second, firms affiliated with chaebol are strengthened by the positive relation between international diversification and tax avoidance. It is interpreted that chaebol firms have more effective opportunities to reduce taxes than other firms. When entering foreign markets, they can share experience and resources to decrease taxation within the large business group. Originality/value - This study provides empirical evidence regarding the tax effect of international diversification. Unlike prior studies, international diversification is positively related to tax avoidance in Korea. In addition, we present additional evidence on the chaebol effects of international diversification on tax avoidance, in which they have an advantage to reduce taxes using transfer pricing through related party transactions, income shifting to low tax rate countries, and establishing subsidiaries in tax havens.