Tax avoidance that reduces transfers from shareholders to the government is traditionally viewed as value enhancing to shareholders. The agency perspective of tax avoidance, however, suggests that opportunistic managers may exploit the obfuscatory nature of tax avoidance to mask rent extraction. To shed light on these conflicting views, I use a self-constructed opacity index and multiple measures of tax avoidance to examine how corporate transparency relates to tax avoidance. I find that more transparent firms, which potentially have less severe agency problems, avoid more tax relative to their opaque counterparts. This result suggests that in a large section of the economy, tax avoidance is mainly engaged in by managers to enhance shareholder wealth. Further, I find that investors place a value premium on tax avoidance, but the price premium decreases with corporate opacity. This is consistent with the notion that corporate transparency facilitates the monitoring of managerial actions and thus alleviates outside investors’ concern with the hidden agency costs associated with tax avoidance. / text

This thesis empirically studies the relation between corporate social responsibility (CSR) and corporate tax avoidance. Based on a sample of 3304 observations between 2002 and 2014, I find that the CSR score of companies is negatively related to their effective tax rate. This indicates that on average, responsible companies are more involved in tax avoidance activities compared to less responsible companies. This result is robust against different sets of control variables. The results of this thesis are contrary towards previous research, where most studies find a negative relation between CSR and tax avoidance. In addition, I examine how four dimensions of CSR are related to corporate tax avoidance and I find that economic performance and environmental performance are positive significant related towards tax avoidance. This indicates that shareholder and client loyalty, as well as resource and emission reduction, relate to a higher extent of corporate tax avoidance.

Purpose : The aim of this paper is to examine how companies which are subject to criticism for their tax avoidance strategies respond to such criticism by analyzing tax related disclosures in organizations’ annual reports as well as corporate social responsibility reports. Design/Methodology/Approach: A qualitative research design was applied using content analysis on annual and corporate social responsibility reports which were collected from the companies’ archives. The reports were selected in terms of the time that the tax avoidance scandal was exposed on media. Therefore, a three-year timeframe of reports was studied, one year before the scandal, the year of the scandal and one year after. The interpretation of the results was done using legitimacy theory. Findings : Three different disclosure strategies have been identified, namely accepting, challenging and influential strategies, which companies use in different ways A variation of responses to media criticism among the companies have been observed which indicates that there is not a framework of answering to media criticism for tax avoidance strategies. The study also illustrates that there is lack of disclosure strategies within the corporate social responsibility reports. Limitations/Implications: The data were collected only from annual reports and CSR reports; other corporate releases were not taken into consideration. The selected companies include one European company and five U.S. companies Originality/Value: The paper contributes to the understanding on how multinationals who are key actors use different response strategies for aggressive tax management as well as provides important information to tax administrators. Furthermore, a theoretical basis on linking corporate response strategies to media criticism based on a legitimacy framework is provided, which could facilitate managers in dealing with the public criticism when their legitimacy is threatened.

Este estudo investiga se o planejamento tributário efetuado pelas companhias abertas é uma prática de gestão que gera valor para o acionista. Embora se possa conjeturar que o aumento de lucros proporcionado pela economia de tributos contribua para elevar o valor da firma, uma avaliação incompleta de todos os custos do planejamento tributário possibilita o surgimento de quadros em que os custos superam os benefícios, reduzindo o retorno para os acionistas e afetando negativamente o valor da firma. Estudos desta questão efetuados em outros países apresentaram resultados variados. Para a verificação empírica, utilizou-se de análise de dados em painel, realizada sobre uma amostra de 1.432 observações do tipo empresa-ano, composta por 310 companhias abertas negociadas em bolsa nos anos de 2007 a 2012. O valor da firma foi estimado pelo Q de Tobin e o planejamento tributário por duas métricas distintas, alternadamente: Book-Tax Differences, controlada por accruals, e total de tributos distribuídos na DVA, ambas padronizadas pelo ativo. Visando obter resultados robustos, a amostra foi estratificada em função da agressividade histórica das firmas quanto ao planejamento tributário. Os resultados mostram que existe uma relação negativa entre planejamento tributário e valor da firma no estrato das firmas mais agressivas, não tendo havido convergência de evidências no estrato das firmas menos agressivas. Em função das peculiaridades do mercado de capitais brasileiro, foram analisados também os efeitos da governança corporativa, da gestão familiar e da concentração acionária sobre a relação estudada. Os resultados mostram que estes fatores não conseguem conter a diminuição de valor ocorrida no estrato das firmas agressivas. A contribuição desta pesquisa para a literatura consiste na demonstração dos efeitos que os custos de agência exercem sobre as avaliações dos investidores no mercado de capitais e na evidenciação da relação negativa entre planejamento tributário e valor da firma, detectada no conjunto das firmas agressivas, o que pode orientar a conduta dos investidores, analistas de mercado e gestores. / This study investigates whether tax planning activities conducted by publicly traded firms represent a management practice that creates shareholder value. While one might say, at first, that the increase in profits provided by the tax savings contributes to raise the value of the firm, an incomplete assessment of all the costs of tax planning facilitates the emergence of scenarios in which the costs outweigh the benefits, reducing the return to shareholders and adversely affecting the firm value. Studies of this issue in other countries found mixed evidence. For the empirical verification, analysis of panel data was conducted on a sample of 1,432 firm-year observations, composed of 310 publicly traded firms in years 2007 to 2012. Firm value was estimated by Tobin\'s Q and tax planning was proxied by two distinct metrics, alternately: Book-Tax Differences, controlled by total accruals, and total taxes distributed in Value Added Statement, both scaled by total assets. In order to obtain more robust results, the sample was stratified according to historical aggressiveness of the firms\' tax planning. The results show that there is a negative relationship between tax planning and firm value in the stratum of the most aggressive firms. Evidence didn\'t converge for the stratum of less aggressive firms. Due to the peculiarities of the Brazilian capital markets, the effects of corporate governance, ownership concentration and family management over the investigated relationship were also analyzed. The results show that these factors can not contain the value destruction that occurs in the stratum of the aggressive firms. The contribution of this research to the literature consists in demonstrating the effects that agency costs have on firm evaluations made by investors in the Brazilian capital markets and the disclosure of the negative relationship between tax planning and firm value found in the group of the aggressive firms, which can guide the behavior of investors, market analysts and managers.

Este estudo investiga se o planejamento tributário efetuado pelas companhias abertas é uma prática de gestão que gera valor para o acionista. Embora se possa conjeturar que o aumento de lucros proporcionado pela economia de tributos contribua para elevar o valor da firma, uma avaliação incompleta de todos os custos do planejamento tributário possibilita o surgimento de quadros em que os custos superam os benefícios, reduzindo o retorno para os acionistas e afetando negativamente o valor da firma. Estudos desta questão efetuados em outros países apresentaram resultados variados. Para a verificação empírica, utilizou-se de análise de dados em painel, realizada sobre uma amostra de 1.432 observações do tipo empresa-ano, composta por 310 companhias abertas negociadas em bolsa nos anos de 2007 a 2012. O valor da firma foi estimado pelo Q de Tobin e o planejamento tributário por duas métricas distintas, alternadamente: Book-Tax Differences, controlada por accruals, e total de tributos distribuídos na DVA, ambas padronizadas pelo ativo. Visando obter resultados robustos, a amostra foi estratificada em função da agressividade histórica das firmas quanto ao planejamento tributário. Os resultados mostram que existe uma relação negativa entre planejamento tributário e valor da firma no estrato das firmas mais agressivas, não tendo havido convergência de evidências no estrato das firmas menos agressivas. Em função das peculiaridades do mercado de capitais brasileiro, foram analisados também os efeitos da governança corporativa, da gestão familiar e da concentração acionária sobre a relação estudada. Os resultados mostram que estes fatores não conseguem conter a diminuição de valor ocorrida no estrato das firmas agressivas. A contribuição desta pesquisa para a literatura consiste na demonstração dos efeitos que os custos de agência exercem sobre as avaliações dos investidores no mercado de capitais e na evidenciação da relação negativa entre planejamento tributário e valor da firma, detectada no conjunto das firmas agressivas, o que pode orientar a conduta dos investidores, analistas de mercado e gestores. / This study investigates whether tax planning activities conducted by publicly traded firms represent a management practice that creates shareholder value. While one might say, at first, that the increase in profits provided by the tax savings contributes to raise the value of the firm, an incomplete assessment of all the costs of tax planning facilitates the emergence of scenarios in which the costs outweigh the benefits, reducing the return to shareholders and adversely affecting the firm value. Studies of this issue in other countries found mixed evidence. For the empirical verification, analysis of panel data was conducted on a sample of 1,432 firm-year observations, composed of 310 publicly traded firms in years 2007 to 2012. Firm value was estimated by Tobin\'s Q and tax planning was proxied by two distinct metrics, alternately: Book-Tax Differences, controlled by total accruals, and total taxes distributed in Value Added Statement, both scaled by total assets. In order to obtain more robust results, the sample was stratified according to historical aggressiveness of the firms\' tax planning. The results show that there is a negative relationship between tax planning and firm value in the stratum of the most aggressive firms. Evidence didn\'t converge for the stratum of less aggressive firms. Due to the peculiarities of the Brazilian capital markets, the effects of corporate governance, ownership concentration and family management over the investigated relationship were also analyzed. The results show that these factors can not contain the value destruction that occurs in the stratum of the aggressive firms. The contribution of this research to the literature consists in demonstrating the effects that agency costs have on firm evaluations made by investors in the Brazilian capital markets and the disclosure of the negative relationship between tax planning and firm value found in the group of the aggressive firms, which can guide the behavior of investors, market analysts and managers.

Not all companies are equally aggressive in their pursuit of corporate tax avoidance, which explains intensive research on the determinants of tax avoidance. Many determinants have been investigated, but the process of tax avoidance, and the relationships between corporate tax avoidance, longtermism (indicative of a stakeholder-orientated corporate culture), and CEO characteristics (informed by upper-echelon theory), are not yet fully understood. Much of previous research is conceptualised from theories such as principal-agent theory. This study investigates the influence of stakeholder orientation, using corporate culture, on corporate tax avoidance, in response to calls for more research using stakeholder theory. A mixed-method approach is used. The quantitative stream uses regressions to investigate the relationship between corporate tax avoidance, corporate culture, and tax-knowledgeable CEOs, based on a sample of 112 large, listed South African companies, studied over a period of 15 years. The South African setting allows the operationalisation of a tax-knowledgeable CEO, based the homogenous nature of CEOs' qualifications in South Africa, where many are chartered accountants. The results suggest that long-term oriented companies pay more tax on average. The results further suggest that tax knowledgeable CEOs are associated with more tax avoidance. The qualitative stream conducts eleven interviews with corporate tax advisors, showing the influence of corporate culture and CEO characteristics on corporate tax avoidance processes, but also how corporate culture and CEO-characteristics mutually inform each other. Altogether, the evidence indicates that the effect of corporate culture is less static than expected, and that the influence of corporate culture on tax avoidance can transcend the influence of CEO-characteristics, as an upperechelon effect. The interviews suggest mechanisms used by CEOs to influence tax culture, such as the creation of a company-wide awareness of the strategic importance of low effective tax rates. These results also indicate the ethical dilemma faced by executives of large companies when considering the use of tax-deductible corporate social responsibility initiatives, not to benefit shareholders or agents, but rather to benefit society as a corporate stakeholder, when governments would not.

The main goal of this thesis is to provide a sociologically informed analysis of tax avoidance and tax evasion in contemporary Mexico and Sweden, focusing particular attention on the explanatory role of social networks, social interactions, and positive feedback mechanisms. Two major data sources are used: (1) A panel dataset that includes all persons, 16 years or older, who resided in Stockholm County during at least one of the years 1990 to 2003 (N=1,967,993). The dataset includes detailed information on the socio-demographic characteristics, kinship networks, and criminal offences of these individuals; (2) A random sample of 36,949 firms that appeared in the Mexican Federal Register of Taxpayers for the year 2002. The records of the Mexican Federal Administrative Fiscal Tribunal provided data on all types of tax claims appealed before them during the 2002-2008 period. A variety of approaches and techniques are used such as agent-based simulation models, discrete time event history models, random effect logit models, and hierarchical linear models. These models are used to test different hypotheses related to the role of social networks, social interactions, and positive feedback mechanisms in explaining tax behaviour. There are five major empirical findings. (1) Networks seem to matter for individuals' tax behaviour because exposure to tax crimes of family members appears to increase a person’s likelihood of committing a tax crime. (2) Positive feedback mechanisms appear relevant because if a person commits a tax crime, it seems to increase the likelihood that the person will commit more tax crimes in the future. (3) Positive feedback mechanisms are also important for explaining corporate tax behaviour because a firm that has engaged in legal tax avoidance in the past appears to be more likely to engage in tax avoidance in the future. (4) Network effects are important in the corporate world because exposure to the tax avoidance of other firms increase the propensity of a firm to engage in tax avoidance. (5) Substitution effects between tax evasion and tax avoidance are likely to exist because when tax evasion becomes more prevalent in a firm’s environment, their likelihood of engaging in legal tax avoidance is lowered. The results underscore the importance of a sociological perspective on tax behaviour that takes into account social interactions and positive feedback mechanisms. In order to understand microscopic as well as macroscopic tax evasion patterns, the results presented in this thesis suggest that much more attention must be given to mechanisms through which taxation crimes breed more taxation crimes.