[Home ] [Archive]   [ فارسی ]  
:: Main :: About :: Current Issue :: Archive :: Search :: Submit :: Contact ::
Main Menu
Home::
Journal Information::
About the Journal
Editorial Board
Aims& Scopes
Journal News
Articles archive::
All Issues
Current Issue
For Authors::
Call for Papers
Submission Instruction
Submission Form
For Reviewers::
Reviewers Section
Registration::
Registration Information
Registration Form
Contact us::
Contact Information
Contact us
Site Facilities::
Site map
Search contents
FAQ
Top 10 contents
Inform to friends
::
Search in website

Advanced Search
..
Receive site information
Enter your Email in the following box to receive the site news and information.
..
:: year 16, Issue 61 (2024) ::
fa 2024, 16(61): 16-36 Back to browse issues page
The Effect of Value Chain Efficiency on Tax Avoidance, Cash Flows, and Shareholders Wealth
Behrooz Badpa * 1, Sanaz Golnazari2 , Saeedeh Naderi2
1- Department of Accounting, Ilam University, Ilam, Iran.
2- Ilam University, Ilam, Iran.
Abstract:   (422 Views)
 Companies with the most efficient value chain thus address success factors and engage less in tax avoidance. This study investigated the effect of value chain efficiency on tax avoidance, shareholder wealth, and cash flows, and then delineated the impact of tax avoidance on shareholder wealth. Moreover, the impact of two key characteristics, company size and debt ratio, on tax avoidance was assessed. The statistical population included the companies listed on the Tehran Stock Exchange, Iran, of which 142 cases were selected as the study samples by screening, and investigated within an 11-year period (2011-2021). The results demonstrated that value chain efficiency has a negative effect on tax avoidance, but a positive impact on shareholder wealth and cash flows. On the other hand, tax avoidance does not influence shareholder wealth, but increases cash flows. Besides, company size has a positive effect on tax avoidance, whereas debt ratio reduces it. According to the results, the synergy of value-creating activities improves operational results by increasing cash flows and also improving the market value of the company. On the other hand, companies that have a more efficient and favorable value chain are less involved in tax avoidance. From a practical point of view, based on the results, tax avoidance cannot be considered a policy aimed at misleading the real value of the company's shares, and managers, investors, and analysts can make better decisions by relying on the operational and non-operational capabilities of the value chain that actually lead to wealth creation.

 
Article number: 2
Keywords: Tax Avoidance, Shareholder Wealth, Cash Flows, Value Chain Efficiency, Structural Equation Modeling.
Full-Text [PDF 708 kb]   (54 Downloads)    
Type of Study: Research | Subject: Special
References
1. Badertscher, B.A., S.P. Katz & S.O. Rego. (2013). The separation of ownership and control and corporate tax avoidance. Journal of Accounting and Economics 56 (2–3): 228–250.
2. Baik, B., J. Chae, S. Choi & D.B. Farber. (2013). Changes in operational efficiency and firm Performance: A Frontier Analysis Approach. Contemporary Accounting Research 30(3): 996–1026.
3. Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management 17(1): 99–120.
4. Blocher, E., D. Stout & G. Cokins. (2009). Cost management: A strategic emphasis. McGraw-Hill, Irwin, 5th edition.
5. Cen, L., E.L. Maydew, L. Zhang & L. Zuo. (2017). Customer–supplier relationships and corporate tax avoidance. Journal of Financial Economics 123(2): 377-394.
6. Chen, S., X. Chen, Q. Cheng & T. Shevlin. (2010). Are family firms more tax aggressive than non-family firms? Journal of Financial Economics 95(1): 41-61.
8. Chen, X., N. Hu, X. Wang & X. Tang. (2014). Tax avoidance and firm value: Evidence from China. Nankai Business Review International 5(1): 25-42.
9. Dang, H.N., V.T.T. Vu, X.T. Ngo & H.T.V. Hoang. (2019). Study the impact of growth, firm size, capital structure, and profitability on enterprise value: Evidence of enterprises in Vietnam. Journal of Corporate Accounting & Finance 30(1): 144-160.
10. Desai, M.A., & D. Dharmapala. (2009). Corporate tax avoidance and firm value. The Review of Economics and Statistics 91(3): 537–546.
11. De-Young, R., & K.P. Roland. (2001). Product mix and earnings volatility at commercial banks: Evidence from a degree of total leverage model. Journal of Financial Intermediation 10(1): 54-84.
12. Dutta, S., O. Narasimhan & S. Rajiv. (1999). Success in high-technology markets: Is marketing capability critical? Marketing Science 18(4): 547-568.
13. Dyreng, S., M. Hanlon & E. Maydew. (2010). The effects of executives on corporate tax avoidance. The Accounting Review 85(4): 1163-1189.
14. Dyreng, S.D., M. Hanlon & E.L. Maydew. (2008). Long-run corporate tax avoidance. The Accounting Review 83(1): 61-82.
15. Dyreng, S.D., M. Hanlon, E.L. Maydew & J.R. Thornock. (2017(. Changes in corporate effective tax rates over the past 25 years. Journal of Financial Economics 124(3): 441–463.
16. Eisenhardt, K.M. & J.A. Martin. (2000). Dynamic capabilities: What are they? Strategic Management Journal 21(10-11): 1105-1121.
17. Fornell, C., & D.F. Larcker. (1981). Evaluating structural equation models with unobservable variables and measurement error. Journal of Marketing Research 18(1): 39–50.
18. Francis, B., X. Sun & Q. Wu. (2013). Managerial ability and tax avoidance. Available at: http://ssrn.com/abstract=2348695.
19. Graham, J.R. (2000(. How big are the tax benefits of debt? Journal of Finance 55(5): 1901–1941.
20. Graham, J.R., & A. Tucker. (2006). Tax shelters and corporate debt policy. Journal of Financial Economics 81(3): 563–594.
21. Gruca, T.S., & L.L. Rego. (2005). Customer satisfaction, cash flow, and shareholder value. Journal of Marketing 69(3): 115-130.
22. Gupta, S., & K. Newberry. (1997), Determinants of the variability in corporate effective tax rate: evidence from longitudinal data. Journal of Accounting & Public Policy 16: 1-39.
23. Hair, J.F., G.T.M. Hult, C.M. Ringle & M. Sarstedt. (2017). A primer on partial least squares structural equation modeling (PLS-SEM). 2nd Ed., Sage: Thousand Oaks.
24. Hanlon, M., & J. Slemrod. (2009). What does tax aggressiveness signal? Evidence from stock price reactions to news about tax shelter involvement. Journal of Public Economics 93(1-2): 126-141.
25. Hanlon, M., & S. Heitzman. (2010). A review of tax research. Journal of Accounting and Economics 50(2-3): 127-178.
26. Hapsari, D.W., W. Yadiati, H. Suharman & D. Rosdini. (2023). The mediating impact of value chain in the link between corporate governance and SOE’s performance. Australasian Accounting, Business and Finance Journal 17(2): 75-85.
27. Hasan, I., C.K.S. Hoi, Q. Wu & H. Zhang. (2014). Beauty is in the eye of the beholder: The effect of corporate tax avoidance on the cost of bank loans. Journal of Financial Economics 113(1): 109-130.
28. Hasan, M.M., G.J. Lobo & B. Qiu. (2021). Organizational capital, corporate tax avoidance, and firm value. Journal of Corporate Finance 70: 102050.
29. Henseler, J., T.K. Dijkstra, M. Sarstedt, C.M. Ringle, A. Diamantopoulos, D.W. Straub & R.J. Calantone. (2014). Common beliefs and reality about partial least squares: comments on Rönkkö & Evermann (2013). Organizational Research Methods 17(2): 182-209.
30. Hoque, Z. (2001). Strategic management accounting in the value-chain framework: A case study. Journal of Cost Management 15(2): 21-27.
31. Huselid, M.A., S.E. Jackson & R.S. Schuler. (1997). Technical and strategic human resources management effectiveness as determinants of firm performance. Academy of Management Journal 40(1): 171–188.
32. Kaplow, L. (2006). On the undesirability of commodity taxation even when income taxation is not optimal. Journal of Public Economics 90(6–7): 1235-1250.
33. Kim, E.B., Y. Li, & L. Zhang. (2011). Corporate tax avoidance and stock price crash risk: Firm-level analysis. Journal of Financial Economics 100(3): 639-662.
34. Kock, N. (2015). Common method bias in PLS-SEM: A full collinearity assessment approach. International Journal of e-Collaboration 11(4): 1-10.
35. Luo, X., & C. Homburg. (2008). Satisfaction, complaint, and the stock value gap. Journal of Marketing 72(4): 29-43.
36. Luo, X., & C.B. Bhattacharya. (2006). Corporate social responsibility, customer satisfaction, and market value. Journal of Marketing 70(4): 1–18.
37. Mangoting, Y., M.V. Nugroho & A. Yanuar. (2018). Tax avoidance dynamics across firm’s life cycle. Advances in Economics, Business and Management Research (AEBMR) 92: 355-362.
38. Narasimhan, O., S. Rajiv & S. Dutta. (2006). Absorptive capacity in high-technology markets: The competitive advantage of the haves. Marketing Science 25(5): 510-524.
39. Nguyen, T., & H. Nguyen. (2020). Capital structure and firm performance of non-financial listed companies: Cross-sector empirical evidences from Vietnam. Accounting 6(2): 137-150.
40. Park, J., C.Y. Ko, H. Jung & Y.S. Lee. (2016). Managerial ability and tax avoidance: Evidence from Korea. Asia-Pacific Journal of Accounting & Economics 23(4): 449–477
41. Porter, M.E. (1991). Towards a dynamic theory of strategy. Strategic Management Journal 12: 95–117.
42. Scholes, M., M. Wolfson, M. Erickson, E. Maydew & T. Shevlin. (2009). Taxes and business strategy: A planning approach, 4th edition. Prentice Hall, Inc., Englewood Cliffs, NJ.
43. Shin, Y., & J.M. Park. (2023). The effect of a company’s sustainable competitive advantage on their tax avoidance strategy-Focusing on market competition in Korea. Sustainability 15(10): 7810.
44. Siao, W.S., & T.K. Chou. (2013). Does managerial ability improve value of cash holdings? Available at: http://sfm.finance.nsysu.edu.tw.
45. Siegfried, J.J. (1974). Effective average U.S. corporation income tax rates. National Tax Journal 27: 245–259.
46. Slemrod, J. (2004). The economics of corporate tax selfishness. National Tax Journal 57(4): 877–899.
47. Stickney, C.P., & V.E. Mc-Gee. (1982). Effective corporate tax rates, the effect of size, capital intensity, leverage, and other factors. Journal of Accounting & Public Policy 1: 125-152.
48. Sun, W., & K. Cui. (2012). Value chain capability, value strategies and firm default risk. Journal of Financial Services Marketing 17: 301-315.
49. Sun, W., S. Yao & R. Govind. (2019). Reexamining corporate social responsibility and shareholder value: The inverted-u-shaped relationship and the moderation of marketing capability. Journal of Business Ethics 160: 1001–1017.
50. Sun, W., Z. Ding & J. Price. (2020). Board structure and firm capability: An environment embedded relationship between board diversity and marketing capability. Industrial Marketing Management 90: 14–29.
51. Teece, D.J., G. Pisano & A. Shuen. (1997). Dynamic capabilities and strategic management. Strategic Management Journal 18(7): 509–533.
52. Tenenhaus, M., S. Amato & V. Esposito-Vinzi. (2004). A global goodness-offit index for PLS structural equation modeling, Proceedings of the XLII SIS Scientific Meeting. Contributed Papers, CLEUP, Padova 739–742.
53. Watts, R.L., & J.L. Zimmerman. (1990). Positive accounting theory: A ten year perspective. The Accounting Review 65(1): 131–156.
54. Zeng, T. (2010). Income tax liability for large corporations in China: 1998-2007. Asian Review of Accounting 18(3(: 180-196.
Send email to the article author

Add your comments about this article
Your username or Email:

CAPTCHA

XML   Persian Abstract   Print

Download citation:
BibTeX | RIS | EndNote | Medlars | ProCite | Reference Manager | RefWorks
Send citation to:
Badpa B, Golnazari S, Naderi S. The Effect of Value Chain Efficiency on Tax Avoidance, Cash Flows, and Shareholders Wealth. fa 2024; 16 (61) : 2
URL: http://qfaj.mobarakeh.iau.ir/article-1-2708-en.html
Rights and permissions
Creative Commons License This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
year 16, Issue 61 (2024) Back to browse issues page
فصلنامه حسابداری مالی Quarterly Financial Accounting
Persian site map - English site map - Created in 0.04 seconds with 37 queries by YEKTAWEB 4679