تعامل حاکمیت شرکتی و رژیم نظارت خارجی
Abstract
1- Introduction
2- Background
3- Hypothesis development
4- Method
5- Data and descriptive statistics
6- Multivariate results
7- Conclusions and limitations
Appendix A
Appendix B. Variable measurement
References
Abstract
This study investigates how the interplay between internal corporate governance and the changes in the tax and corporate governance environment in the U.S. during the early 2000s affected firms' tax avoidance levels. Analyses use a panel of U.S. firms for the period 1997–2005 and permanent book-tax difference and cash effective tax rates as proxies for tax avoidance. Results suggest that, relative to other firms, firms with weakgovernance during the low-regulation period (years 1997–2000) exhibited lower tax-avoidance levels during the high-regulation period (years 2003–2005) in response to the tighter external monitoring regime. The study adds to the corporate tax avoidance literature by providing evidence regarding the importance of considering external monitoring regimes in the study of the relationship between corporate governance and tax avoidance.
Introduction
Corporate scandals and general public concerns led to increased external monitoring activity by tax and financial reporting authorities in the early 2000s. Such increased monitoring was a response to a suspected increase in tax avoidance activities (U.S. Treasury, 1999) and a deterioration of corporate governance institutions (Coffee, 2006).2 Specifically, the IRS increased both reporting requirements and audit activity in an effort to reduce tax avoidance and Congress empowered the SEC, through the Sarbanes-Oxley Act of 2002 (SOX), to increase internal control requirements for publically traded firms. In this paper, I provide evidence regarding whether tax avoidance did in fact decrease following the changes in external monitoring. Furthermore, I examine whether firms with weaker corporate governance in the 1990s exhibited lower tax avoidance levels than other firms after the regulatory regime changed.3 Such weaker corporate governance firms were probably affected to a greater extent than other firms by regulatory regime changes because they were most likely to have weaknesses in their internal controls (Hoitash, Hoitash, & Bedard, 2009; Krishnan, 2005). Therefore, they may have invested resources to improve their internal controls and eliminated certain risks from their tax avoidance activities (KPMG, 2006) that would result in lower tax avoidance levels relative to other firms. My study extends and contributes to our understanding of the interplay between external and internal corporate governance mechanisms on corporate tax avoidance and it is of interest to regulators and academics.