Corporate tax avoidance through tax regulations and tax avoidance strategies, reduces the incidence of taxation or tax effect of deferred taxes. Tax avoidance is an important corporate strategy. Tax avoidance includes tax-free government bond debt interest held bonds, hybrid securities, transnational profit transfer or assignment policies, establishment of intangible asset holding companies and overseas development [1-4]. While many businesses will take advantage of opportunities for tax avoidance activities, many firms will not. Dyreng et al. [5] indicate that in the United States under federal nominal tax rates of up to 35%, about 1/4 of companies will maintain a long-term effective tax rate of less than 20%; only about 1/4 of the actual tax rate is higher than 35% and not just for a single year, but even for a decade, the United States tax rate was higher than that of most other developed countries, showing that many companies are not actively involved in tax avoidance.

But most companies use tax avoidance activities to reduce their effective tax rate. Robinson et al. [6] indicate that other companies view their tax department as a profit center instead of cost center; Armstrong et al. [7] point out that many companies will be encouraged to reduce their effective tax rate. Traditionally, it is believed that corporate tax avoidance represents wealth transfer from government to corporations and that this should enhance firm value. Businesses engaged in tax planning will take into account their costs (implementation cost, reputation loss and potential punishment) and benefits. The advantages, such as saving tax expenditure, thereby reducing the tax burden on business, means more flexible use of funds and will increase the company's value. Past literature rarely explores the relationship between tax avoidance and firm value and reveals some inconsistencies; therefore, this study used a large sample of Taiwan listed (TSE) and Over the Counter (OTC)-firms data for the period 2010-2017 and fixed effects regression model to examine the relation between tax avoidance and firm.

This study investigates the degree to which corporate tax avoidance activity is valued by investors in a large sample of Taiwan firms. The results of this study show that Effective Tax Rates (ETR) signify higher firm value; tax savings enable the enterprise to have more funds and also create greater enterprise value. This result supports the hypothesis of this research, as well as the results of Desai and Dharmapala [8]. 

The paper proceeds as follows. Section II presents the literature views of corporate tax avoidance and hypothesis development. Section III describes the research design, data selection and the measure of corporate tax avoidance. Section IV presents the two-stage regression results. Section V presents the conclusion.

Literature Review and Hypotheses Development

Theories of Corporate Tax Avoidance: Corporate tax avoidance activity has two alternative perspectives on the motivations and effects of this activity. Several studies investigated corporate tax avoidance as an extension of other tax-favored activity, such as the use of debt. Graham and Tucker [9] identify size and profitability as positively associated with the use of tax shelters and argue that tax shelters serve as a substitute for interest deductions in determining capital structure. An alternative theoretical approach emphasizes the interaction of these tax avoidance activities and the agency problems inherent in publicly held firms. According to this view, obfuscatory tax avoidance activities can create a shield for managerial opportunism and the diversion of rents. Desai and Dharmapala [10] and Desai et al. [11] emphasize that corporate tax avoidance entails distinct costs, which may outweigh the benefits to shareholders, given the opportunities for diversion that these vehicles provide. 

While the traditional view of corporate tax avoidance suggests that shareholder value should increase with tax avoidance activity, the alternative view provides a more nuanced prediction. Specifically, firm governance should be an important determinant of the valuation of purported corporate tax savings. While the direct effect of tax avoidance is to increase the after-tax value of a firm, these effects are potentially offset, particularly in poorly governed firms, by the increased opportunities for managerial rent diversion. Thus, the net effect on firm value should be greater for firms with stronger governance institutions.

Empirical View of Tax Avoidance Activities

Tax avoidance articles dating back to Scholes et al. [12] were continued and developed in a number of relevant studies. First of all, there is good evidence that tax avoidance behavior is engaged in a variety of different tax strategies, from simple strategies, such as holding tax-exempt government bonds to complex strategies, such as debt to equity hybrid security, transnational profit transfer and allocation (cross-border avoidance strategies), establishment of intangible asset holding companies and overseas development [1-4].

The purported growth in corporate tax avoidance activity has given rise to speculation concerning the motivations and effects of this activity. Past studies investigated corporate tax avoidance as an extension of other tax-favored activity, such as the use of debt. Graham and Tucker [9] constructed a sample of firms involved in 44 corporate tax shelter cases over the period 1975-2000. They identify characteristics of size and profitability that are positively associated with the use of tax shelters and argue that tax shelters serve as a substitute for interest deductions in determining capital structure. 

Another approach emphasizes the interaction of these tax avoidance activities and the agency problems inherent in publicly held firms. Desai and Dharmapala [10] and Desai et al. [11] form part of an emerging paradigm that emphasizes the links between firms’ governance arrangements and their responses to taxes. Desai and Dharmapala [8] discuss the interaction between tax shelters and various forms of managerial opportunism, illustrating that straightforward diversion and subtle forms of earnings manipulation can be facilitated when managers undertake tax avoidance activity.

Many companies undertake tax avoidance activities; Armstrong et al. [7] point out that many managers are encouraged to reduce their companies’s tax burden. Robinson et al. [6] have shown that some enterprises view their tax department as a profit center instead of cost center. Dyreng et al. [5] indicate that one-fourth of corporations will remain below the long-term effective tax rate of 20% in the USA and that some one-fourth of enterprises with more than ten years of an effective tax rate higher than 35% avoid public scrutiny and criticism from others for tax avoidance activities. 

Tax Avoidance and Firm Value

When an enterprise is engaged in tax planning, it will take into account both costs and benefits, with advantages such as saving tax expenditure, reducing the tax burden on business and making more flexible use of funds to increase firm value. There have been many researches on corporate tax avoidance and tax evasion, aiming to influence the stock market. Ellert [13] constructed a sample of firms involved in 566 corporate tax lawsuit cases over the period 1935-1971 and indicated that for the announcement of an indictment within one month, a company's share price showed significantly positive abnormal returns. Garbade et al. [14] studied anti-trust lawsuits of 34 companies and the impact on their stock prices from 1937 to 1974; their study found that the average stock price rose in the 6% range. Bosch and Eckard [15] examined federal indictment involving 127 companies and found stock prices impacted from 1962 to 1980, with the average excess return rate -1.08%, which estimated that only 13% could be attributed to the costs of litigation and that the remaining present value of the loss was due to losing the monopoly profits. Karpoff and Lott [16] investigated corporate fraud cases on stock price reaction from 1978 to 1987; they found that reporting irregularities did not cause significant negative abnormal returns.

Hanlon and Slemrod [17] explored the news and stock prices of companies engaged in tax avoidance response. They found that when a company's stock price falls, with tax avoidance news and activities as a negative event, although a share price reaction occurs, compared to the accounting incident response, it is much smaller. Gallemore et al. [18] also came to the same conclusion; their research revealed although information on corporate tax avoidance can make shares sink in the early event days, the stock will rebound to the level before the event occurred, as it is only a temporary effect.

Corporate Tax Avoidance, Governance and Firm Value

On the impact of corporate governance on tax avoidance, most scholars found that good corporate governance decreases corporate tax avoidance. Desai et al. [11] found that good corporate governance could be effective in limiting executive power, thereby inhibiting a manager’s acts of misappropriation of assets and decreasingtax-avoidance activities. Desai and Dharmapala [10] indicate that enterprises with manager's incentive salary could inhibit the action of tax avoidance. Desai and Dharmapala [8] used Tobin’s q to research the relationship between investors’ equity value and tax avoidance. They found that tax avoidance and corporate value are positively associated under good corporate governance, but with no significant relationship between corporate tax avoidance and corporate value when a corporate has bad corporate governance. They believe that tax avoidance is consistent with the interests of the shareholders. 

The literature shows that under good corporate governance, corporate tax avoidance behavior is reduced and that there is a positive relationship to corporate value, but a negative message of tax avoidance (tax evasion) is more likely to damage enterprise value. The following hypothesis is offered.

Hypothesis: Ceteris Paribus, Tax Avoidance is Negatively Associated with Firm Value

Factors Influencing Corporate Value: Corporate value is the expected free cash flow related to its weighted average cost of capital for the discount rate’s present value. It is closely related to enterprise financial decisions. Enterprise value for all enterprise stakeholders (including employees, shareholders, managers, creditors, governments, etc.) means access to satisfactory returns. Enterprise value determines a stock's value; in other words, the value also determines the stock price. 

Besides, Tobin's Q is available to measure the market value of a firm. Many scholars believe that Tobin's Q (company market value divided by the replacement cost of assets of the company) is one of the ideal measures of financial performance. The higher the Tobin’s Q value, the higher the value of the enterprise [19-21].

Most scholars in tax-avoidance-related studies use the Effective Tax Rate (ETR) as a measure of tax burden; for example: Stickney and McGee [22] point out that high capital intensity enterprises and businesses with higher debt financing will result in a lower effective tax rate. Zimmerman [23] studied the relationship between enterprise size and the effective tax rate, using empirical evidence from the United States 50 largest listed enterprises; compared to other enterprise, they had a higher effective tax rate. Porcano [24] found that companies often use foreign tax credits and accelerated depreciation to reduce their tax burden, which means a lower effective tax rate. Gupta and Newberry [25] found that a firm's effective tax rate increased after the Tax Reform Act implementation in the USA. Larger size companies have a lower effective tax rate. In addition, they also found that debt financing and the effective tax rate signify a negative relationship, while profitability and an effective tax rate show a positive relationship. Mills et al. [26] and Graham and Tucker [9] point out that enterprises have the ability to use more financing to reduce their tax burden. Chen’s, empirical results show that firm size affects positive effective tax rates, profitability, capital intensity and research and development expenditures, financial leverage, with a significant impact on an industry.

In addition, Hirschey and Weygandt [27] explored the linkages among research and development spending, advertising and enterprise value and found that research and development and advertising expenses have a significant positive correlation with firm value. Peterson and Benesh [28] found that when companies invest in a lot of equipment, it can reduce product cost and improve product quality. Therefore, they presumed that capital intensity will affect the value of enterprises. Miller’s [29] empirical results show that higher debt ratios mean higher enterprise value because of the effects of debt tax shield, higher debt ratio and equity multiplier will be larger. Friend and Lang [30] believe that large enterprises can recruit good managers who know the market, helping to enhance corporate value. Imhof and Seavey [31] got similar results, namely that larger companies can achieve better performance to enhance corporate value.

Empirical Method

Based on the literature review, this study examines tax avoidance, enterprise value and tax havens under the influence of the established two stage regression model to verify the above-mentioned hypothesis.

Stage I: Estimating the Tax Avoidance:

Stage II: Estimating Firm Value:

Value refers to firm value; we use the Tobin’s Q to measure it. TaxAvo is measured by the effective tax rate (TaxAvo_ETR) or book-tax difference (TaxAvo_BTD). SIZE is the size of company. LEV is the ratio of long-term debt. RD is the rate of research and development. CAPI is the ratio of capital intensity. BODI is the ratio of independent director of the board. FAMILY is the dummy variable: 1 when the company belongs to a family business. ELEC is the dummy variable: 1 when the business belongs to the electronic industry. ROA is the rate of return on assets.

Measurement of Variables

Dependence Variable: Firm Value (VALUE): Bernard [32] investigated earnings, dividends and other information associated with the stock price and evaluated the different models. He found the Ohlson model too generalized and its features simplistic, its explanatory power weak, other than in its evaluation of the share price. However, most scholars use Tobin's Q as a measure of financial performance; higher values also represent higher enterprise value [19-21]. Within the literature, using Tobin’s q to measure firm value has become standard since Demsetz and Lehn.

Independence Variable: (Tax Avoidance)

Effective Tax Rates (TaxAvo_ETR): Previous scholars used Effective Tax Rates (ETR) as a measure of corporate tax avoidance variables. ETR is most commonly used in the academic literature as a tax variable aggressiveness. Business used overseas business to decrease the tax burden. ETR is also able to capture this kind of tax avoidance [33]. Therefore, this study uses the ETR to measure the result of tax avoidance behavior and to verify the effects of corporate social responsibility on tax havens. 

This study uses the current income tax expense divided by the net income before tax to measure the ETR. If business income tax expense is negative, then the effective tax rate is set to 0; if net income before tax is negative, the effective tax rate is set to 0. It is expected that the behavior of tax avoidance will decrease the tax burden and the ETR, as there is a negative relationship between ETR and the firm value.

Book-Tax Differences (TaxAvo_BTD)

Another measure of tax avoidance is the Book-Tax Differences (BTD), for constructing a measure of corporate tax avoidance that takes as its starting point the gap between financial and taxable income. The difference between financial income reported from IFRS and to the tax authorities is the book-tax difference, which has attracted considerable interest in recent years and has been related to measuring corporate tax avoidance [34]. 

This study uses the permanent BTD divided by total asset to measure the TaxAvo_BTD. The total BTD is book income to deduct the tax income; the permanent BTD is total BTD to deduct the temporal BTD (which is deferred tax expense divided by the tax rate of 17%). It is expected that the behavior of tax avoidance will increase the book-tax difference; there is a positive relationship between BTD and firm value.

Control Variables

Firm Size (SIZE): The political power hypothesis is that greater size companies have more resources to devote to tax planning or more tax incentives. But there are also opposing arguments; the political cost hypothesis posits that bigger enterprises attract more attention and supervision by the government (internal revenue service investigating opportunities to increase) or the public. Therefore, the corporate burden of paying taxes has become political cost. Zimmerman [23] investigated the relationship between business size and the effective tax rate; he found that the top 50 largest listed enterprises in the USA had higher effective tax rates compared to other enterprises. Chen, found a positive correlation between effective tax rates and firm size. This study uses firm size as the control variable, but did not expect the direction of the impact.

The Ratio of Long-Term Debt (LEV)

Graham, studied the effects of debt-funded tax interest on corporate financial decisions; the empirical results show that the cost of debt interest tax to be deductible and lower taxes. Stickney and McGee [22] point out that companies with higher debt financing will have a reduced effective tax rate, but Graham and Tucker [9] and Chen et al. believe that a higher debt ratio of enterprises enjoys more tax shield benefits and does not need to use other methods to achieve tax avoidance purposes. Therefore, this study did not expect the direction.

The Ratio of Research and Development Expense (RD)

Spending on research and development can be recognized as an expense when the period in the settlement of income tax declarations can be used as a tax deduction benefit, while also enjoying the recognition fee in advance. Companies with massive spending on research and development will also have more opportunities for tax avoidance [17]. This study uses research and development spending as a control variable and expected a positive impact of this variable on tax avoidance.

The Ratio of Capital Intensity (CAPI)

Stickney and McGee [22] point out that business with higher capital intensity and higher debt financing will enjoy a lower effective tax rate. Mills et al. [26] also found that an intensive capital asset and tax avoidance have significant positive effects. This study measures capital intensity under the control variables and the expected impact of this variable on tax avoidance.

The Ratio of Independent Director of the Board (BODI)

Fama and Jense, point out that in making decisions, objective independent directors can be measured in terms of overall enterprise monitoring and protection of shareholders' rights; they can suppress management’s speculative behavior. Desai et al. [11] point out that good corporate governance can effectively limit the powers of the manager, such as misappropriated assets and reduce the related tax avoidance activities. Lanis and Richardson [33] indicate that outside directors (independent director) inhibit tax avoidance activities. This study references Lanis and Richardson [33] and employs independent directors as a control variable; the expected association between independent director of the board and tax avoidance is negative.

Family Business (FAMILY)

Past research found that compared to family business, non-family businesses may engage in more tax planning; this study also takes this variable as the control and expected the impact variables were positively correlated with tax avoidance.

Electronic Industry (ELEC)

Different industries have different tax burdens due to the regulations and tax reduction policy. In Taiwan, due to the Government policy on rewarding scientific and technological industry investment, the electronics industry can receive more tax concessions compared to other industries and the average effective tax rate is lower than in other industries, so this study will include this as a control variable.

Return On Assets (ROA)

Accounting value includes the rate of Return On Assets (ROA), rate of return on shareholders' equity (ROE) and rate of Return On Investment (ROI). Some scholars believe that regarding the operating profits and losses or net income for the current period, the accounting profit on larger companies will be greater. Therefore, firm value through the rate of return on assets, return on equity and return on investment and other financial pointers are a basis for measuring [35,36].

Data and Sample Selection

We employ listed firms with a total of 11,398 firm-years in Taiwan from 2010 to 2017 as the research sample. All the financial data and relevant data used in this study were obtained from the Taiwan Economic Journal (TEJ) database. During the sample selection process, firms that were closed or went bankrupt are excluded. In addition, we exclude observations of financial and insurance industry from the sample because of a difference in their financial characteristics. Moreover, non-December year-end firms were excluded and firms with insufficient financial statement data, missing variables, abnormal values, or extreme values are also excluded. A total of 9,103 firm-year observations were obtained.

Descriptive Statistics and Correlations

Table 1 shows the descriptive statistics for the dependent and independent variables; the mean (median) of Value (Tobin’Q) is 108.15% (83.56%). The mean (median) of TaxAvo_ETR is 11.18% (8.43%), which is below the statutory rate of 17%. The mean (median) of TaxAvo_BTD is 0.062 (0). According to the control varables, the mean (median) of SIZE is 15.229 (15.036). The mean (median) of LEV is 6.84% (1.17%) among companies with lower long-debt rates. The mean (median) of RD is 5.07% (1.48%) among companies with lower R&D expenditures. The mean (median) of CAPI is 13.94% (8.65%), which reflects the difference within samples. The mean (median) of BODI is 22.42% (29%) which coincides with the regulation of corporate governance. The mean of FAMILY is 0.62 which means that 62% of businesses belong to family-business. The mean of dummary varable of ELEC is 0.273, which means about 27.3% of businesses belong to high-tech electronic industry. The last one is the ROA; the mean (median) of ROA is 6.86% (6.59%).

Table 1: Decriptive Statistics

Variables definition: Value is the firm value, we use the Tobin’s Q to measure the value of firm. TaxAvo is Effective Tax Rate (ETR) or Book-Tax Difference (BTD). SIZE is the size of company. LEV is the ratio of long-term debt. RD is rate of research and development. CAPI is the ratio of capital intensity. BODI is the ratio of independence director of the board. FAMILY is the dummy variable of 1 when the company belongs to family business. ELEC is the dummy variable of 1 when the business belongs to high-tech electronic industry

Table 2 shows the Pearson and Spearman correlations among the variables. From Pearson correlations coefficients analysis, the TaxAvo_ETR and the VALUE are positively related but not significantly (0.011, p = 0.2753). The TaxAvo_BTD and the VALUE are positive related and significantly (0.089, p<0.0001), indicating that tax avoidance behaviors may increase the book-tax differences and the value of the firm. 

Among the control variables, the correlations among VALUE and RD, BODI, ELEC, ROA exhibit a significant positive relationship, implying that companies with higer R&D expenture, higher ratio of independent directors and belonging to high-tech electronic industry will have higher firm value. The negative correlations among LEV, SIZE, CAPI and VALUE indicate that large firms or firms with more depreciated assets may have a lower firm value. Finally, the Variance Inflation Factor (VIF) values are less than 2, which means that there is no collinearity between variables in this study.

Table 2: Person and Spearman Correlations 

**,* denote significance at the 1 and 5%, respectively, 2. All variables are defined in Note 1 of Table1

Regression Results

According to the results of regressions of Equation 1 and 2 in Table 3, the regression coefficients on TaxAvo_ETR exhibit significant negativity (-10.657, t = -8.60, respectively), which is consistent with our expection, suggesting that higher tax avoidance behavior is related to a lower effective tax rate. This means that the lower effective tax rate will decrease the tax burden and increase the firm value. 

Regarding the regression results of control variables in Table 3, first of all, the coefficients on LEV are significantly negative (-1.629, t = -19.33), implying that companies’ higher long-term debt will decrease the value of firm. The coefficients on BODI and ROA are significantly positive (0.378, t = 3.27; 3.866, t = 19.92), implying that companies with good corporate goverance and profitability will increase the firm value. The coefficients on SIZE are significantly negative (-13.732, t = -10.35), which is consistent with policy right hypotheses, implying that large firms have more power to improve their firm value.

Table 3: Regression Results-Value_ETR

***, **, * denote significance at the 1, 5 and 10%, respectively, 2. All variables are defined in Note 1 of Table 1, F value = 51.91 (p <0.0001) Adj. R-Sq = 0.033 n = 9,084, F value = 98.18 (p<0.0001) Adj. R-Sq = 0.051 n = 9,084

Additional Analysis

In an additional analysis, this study uses the permanent BTD to measure the level of tax avoidance (TaxAvo_BTD). This study divides the TaxAvo_BTD into two groups. Firstly, the group of TaxAvo_BTD>0 has the financial (book) income > tax income. When companies have more financial income but less book income, it means they will defer paying tax in the future and increase firm value. According to the results of regressions of Equation (2-2) in Table 4, the regression coefficients on TaxAvo_BTD are significantly positive (10.261, t = 3.98), which is consistent with our expectation, suggesting that higher tax avoidance behavior is related to lower tax income. This means that the deferred tax will decrease the tax burden and increase the value of firm.

Table 4: Regression Results-Value_BTD>0

***, **, * denote significance at the 1, 5 and 10%, respectively, 2. All variables are defined in Note 1 of Table1, F value =113.08 (p<0.0001) Adj. R-Sq = 0.1675 n = 3,343, F value = 263.37 (p<0.0001) Adj. R-Sq = 0.2818 n = 3,343

On the other hand, the group of TaxAvo_BTD<0 has financial (book) income <tax income. When companies’ tax income is higher than its financial income, it means they pay higher tax and it will decrease the firm value. 

According to the results of regressions of Equation (1 and 2) in Table 5, the regression coefficients on TaxAvo_BTD are significantly positive (-24.092, t = -6.38), which is consistent with our expectation, suggesting that the greater tax burden will increase firm value. 

Among the control variables, the results of regressions of Equation (2) in Table 4 or of Equation (1 and 2) in Table 5 have the same findings.

Table 5: Regression Results-Value_BTD<0

***, **, * denote significance at the 1, 5 and 10%, respectively, 2. All variables are defined in Note 1 of Table 1, F value = 19.23 (p<0.0001) Adj. R-Sq = 0.0328 n = 3,229, F value = 25.38 (p<0.0001) Adj. R-Sq = 0.0364 n = 3,229

Many current scholars on tax evasion related to enterprise value present inconsistent research results and seldom discuss tax havens and firm value. This study used two-stage regression to estimate the level of tax avoidance behavior and firm value and looked forward to robust results. In additional analyses, this study measured the Effective Tax Rate (ETR) and the permanent Book-Tax Differences (BTD) as two measures of corporate tax avoidance variables and revalidated the relationship between tax avoidance and firm value. When companies exercising more tax avoidance behaviors will respect lower effective tax rates and higher book-tax differences it will positively correlate with firm value.

1. Engel, E. et al. “Debt-equity hybrid securities.” Journal of Accounting Research, vol. 37, no. 2, 1999, pp. 249–274.

2. Dyreng, S.D. and B.P. Lindsey. “Using financial accounting data to examine the effect of foreign operations located in tax havens and other countries on us multinational firms’ tax rates.” Journal of Accounting Research, vol. 47, no. 5, December 2009, pp. 1283–1316.

3. Dyreng, S.D. et al. “Exploring the role delaware plays as a domestic tax haven.” Journal of Financial Economics, vol. 108, no. 3, June 2013, pp. 751–772.

4. Brown, J.L. “The spread of aggressive tax reporting: a detailed examination of the corporate-owned life insurance shelter.” The Accounting Review, vol. 86, no. 1, June 2011, pp. 23–57.

5. Dyreng, S.D. et al. “Long-run corporate tax avoidance.” The Accounting Review, vol. 83, no. 1, January 2008, pp. 61–82.

6. Robinson, J.R. et al. “Performance measurement of corporate tax departments.” The Accounting Review, vol. 85, no. 3, 2010, pp. 1035–1064.

7. Armstrong, C.S. et al. “The incentives for tax planning.” Journal of Accounting and Economics, vol. 53, nos. 1–2, February–April 2012, pp. 391–411.

8. Desai, M.A. and D. Dharmapala. “Corporate tax avoidance and firm value.” The Review of Economics and Statistics, vol. 91, no. 3, August 2009, pp. 537–546.

9. Graham, J.R. and A.L. Tucker. “Tax Shelters and Corporate Debt Policy.” Journal of Financial Economics, vol. 81, no. 3, 2006, pp. 563–594.

10. Desai, M.A. and D. Dharmapala. “Corporate tax avoidance and high-powered incentives.” Journal of Financial Economics, vol. 79, no. 1, January 2006, pp. 145–179.

11. Desai, M.A. et al. “Theft and Taxation.” Journal of Financial Economics, vol. 84, no. 3, 2007, pp. 591–623.

12. Scholes, M.S. et al. “Tax planning, regulatory capital planning and financial reporting strategy for commercial banks.” Review of Financial Studies, vol. 3, no. 4, 1990, pp. 625–650.

13. Ellert, J.C. Antitrust enforcement and stockholder returns. unpublished doctoral dissertation, University of Chicago, Graduate School of Business, 1975.

14. Garbade, K.D. et al. “Market reaction to the filing of antitrust suits: an aggregate and cross-section analysis.” The Review of Economics and Statistics, vol. 64, no. 4, 1982, pp. 686–691.

15. Bosch, J. and E.W. Eckard Jr. “The profitability of price fixing: evidence from stock market reaction to federal indictments.” The Review of Economics and Statistics, vol. 73, no. 2, May 1991, pp. 309–317.

16. Karpoff, J.M. and J.R. Lott Jr. “The reputational penalty firms bear for committing fraud.” Journal of Law and Economics, vol. 36, no. 2, 1993, pp. 757–803.

17. Hanlon, M. and J. Slemrod. “What does tax aggressiveness signal? Evidence from stock price reactions to news about tax aggressiveness.” Journal of Public Economics, vol. 93, nos. 1–2, 2009, pp. 126–141.

18. Gallemore, J. et al. “The reputational costs of tax avoidance.” Contemporary Accounting Research, vol. 31, no. 4, 2014, pp. 1103–1133.

19. Lindenberg, E.B. and S.A. Ross. “Tobin’s q Ratio and Industrial Organization.” Journal of Business, vol. 54, no. 1, 1981, pp. 1–32.

20. Morck, R. et al. “Management ownership and market valuation: An empirical analysis.” Journal of Financial Economics, vol. 20, January–March 1988, pp. 293–315.

21. Chung, K.H. and S.W. Pruitt. “A Simple approximation of tobin’s Q.” Financial Management, vol. 23, no. 3, 1994, pp. 70–74.

22. Stickney, C.P. and V.E. McGee. “Effective corporate tax rates: the effect of size, capital intensity, leverage and other factors.” Journal of Accounting and Public Policy, vol. 1, no. 2, 1982, pp. 125–152.

23. Zimmerman, J.L. “Taxes and firm size.” Journal of Accounting and Economics, vol. 5, 1983, pp. 119–149.

24. Porcano, T. “Corporate tax rates: Progressive, proportional, or regressive.” Journal of the American Taxation Association, vol. 7, no. 2, 1986, pp. 17–31.

25. Gupta, S. and K. Newberry. “Determinants of the variability in corporate effective tax rates: evidence from longitudinal data.” Journal of Accounting and Public Policy, vol. 16, 1997, pp. 1–34.

26. Mills, L. et al. “Investments in tax planning.” The Journal of the American Taxation Association, vol. 20, no. 1, 1998, pp. 1–20.

27. Hirschey, M. and J.J. Weygandt. “Amortization policy for advertising and research and development expenditures.” Journal of Accounting Research, vol. 23, Spring 1985, pp. 326–335.

28. Peterson, P.P. and G.A. Benesh. “A re-examination of the empirical relationship between investment and financing Decision.” Journal of Financial and Quantitative Analysis, vol. 18, no. 4, 1983, pp. 439–453.

29. Miller, M.H. “Debt and taxes.” The Journal of Finance, vol. 32, no. 2, 1977, pp. 261–275.

30. Friend, I. and L.H.P. Lang. “An empirical test of the impact of managerial self-interest on corporate capital structure.” The Journal of Finance, vol. 43, no. 2, 1988, pp. 271–281.

31. Imhof, M.J. and S.E. Seavey. “Corporate risk-taking, firm value and high levels of managerial earnings forecasts.” Advances in Accounting, vol. 30, no. 2, 2014, pp. 328–337.

32. Bernard, V. “The Feltham–Ohlson framework: implications for empiricists.” Contemporary Accounting Research, vol. 11, no. 2, 1995, pp. 733–747.

33. Lanis, R. and G. Richardson. “Corporate social responsibility and tax aggressiveness: an empirical analysis.” Journal of Accounting and Public Policy, vol. 31, no. 1, 2012, pp. 86–108.

34. Manzon Jr., G.B. and G.A. Plesko. “The relation between financial and tax reporting measures of income.” The Law Review, vol. 55, 2002, pp. 175–214.

35. Waddock, S.A. and S.B. Graves. “The corporate social performance–financial performance link.” Strategic Management Journal, vol. 18, no. 4, 1997, pp. 303–319.

36. Preston, L.E. and P. O’Bannon. “The corporate social–financial performance relationship: A typology and analysis.” Business and Society, vol. 36, no. 4, 1997, pp. 419–429.