Strategic Deviation and Corporate Tax Avoidance: A Risk Management Perspective

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dc.citation.issue4
dc.citation.volume17
dc.contributor.authorHabib A
dc.contributor.authorRanasinghe D
dc.contributor.authorPerera A
dc.date.accessioned2024-04-28T23:21:03Z
dc.date.accessioned2024-07-25T06:45:56Z
dc.date.available2024-04-04
dc.date.available2024-04-28T23:21:03Z
dc.date.available2024-07-25T06:45:56Z
dc.date.issued2024-04-04
dc.description.abstractWe examine the association between strategic deviation—defined as the deviation of firms’ resource allocation from that of industry peers—and corporate tax avoidance. By combining the agency perspective with the risk aspect, we argue that managers of firms with high strategic deviation avoid tax compared with those of firms with low strategic deviation. High-strategic-deviant firms who avoid tax are likely to face the risk of compromising firm value. Based on a large sample of 40,168 US firm-year observations for the period 1987–2020, we find evidence supporting our hypothesis. A series of robustness tests validates our main finding. We further provide evidence to suggest that the positive association between strategic deviation and tax avoidance is stronger for deviant firms with high financial constraints, low institutional ownership, firms operating in more competitive markets, and procuring higher auditor provided tax services from incumbent auditors. Importantly, we show that the capital market penalises tax avoidance strategies undertaken by the deviant firms.
dc.description.confidentialfalse
dc.identifier.citationHabib A, Ranasinghe D, Perera A, Perera R. (2024). Strategic Deviation and Corporate Tax Avoidance: A Risk Management Perspective. Journal of Risk and Financial Management. 17. 4.
dc.identifier.doi10.3390/jrfm17040144
dc.identifier.elements-typejournal-article
dc.identifier.issn1911-8066
dc.identifier.urihttps://mro.massey.ac.nz/handle/10179/70827
dc.publisherMDPI (Basel, Switzerland)
dc.relation.isPartOfJournal of Risk and Financial Management
dc.relation.urihttps://www.mdpi.com/1911-8074/17/4/144#:~:text=High-strategic-deviant%20firms%20who,tests%20validates%20our%20main%20finding.
dc.rights(c) 2024 The Author/s
dc.rightsCC BY 4.0
dc.rights.urihttps://creativecommons.org/licenses/by/4.0/
dc.titleStrategic Deviation and Corporate Tax Avoidance: A Risk Management Perspective
dc.typeJournal article
massey.relation.uri-descriptionPublished version
pubs.elements-id488440
pubs.organisational-groupMassey Business School
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