Effects of IFRS adoption on tax avoidance
ABSTRACT This study investigates the association between mandatory International Financial Reporting Standards (IFRS) adoption and corporate tax avoidance. In this study, tax avoidance is defined as a reduction in the effective corporate income tax rate through tax planning activities, whether these...
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| Format: | Article |
| Language: | English |
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Universidade de São Paulo
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| Series: | Revista Contabilidade & Finanças |
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| Online Access: | http://www.scielo.br/scielo.php?script=sci_arttext&pid=S1519-70772017000300407&lng=en&tlng=en |
| _version_ | 1828950575251718144 |
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| author | Renata Nogueira Braga |
| author_facet | Renata Nogueira Braga |
| author_sort | Renata Nogueira Braga |
| collection | DOAJ |
| description | ABSTRACT This study investigates the association between mandatory International Financial Reporting Standards (IFRS) adoption and corporate tax avoidance. In this study, tax avoidance is defined as a reduction in the effective corporate income tax rate through tax planning activities, whether these are legal, questionable, or even illegal. Three measures of tax avoidance are used and factors at the country and firm level (that have already been associated with tax avoidance in prior research) are controlled. Using samples that range from 9,389 to 15,423 publicly-traded companies from 35 countries, covering 1999 to 2014, it is found that IFRS adoption is associated with higher levels of corporate tax avoidance, even when the level of book-tax conformity required in the countries and the volume of accruals are controlled, both of which are considered potential determinants of this relationship. Furthermore, the results suggest that after IFRS adoption, firms in higher book-tax conformity environments engage more in tax avoidance than firms in lower book-tax conformity environments. It is also identified that engagement in tax avoidance after IFRS adoption derives not only from accruals management, but also from practices that do not involve accruals. The main conclusion is that companies engage more in tax avoidance after mandatory IFRS adoption. |
| first_indexed | 2024-12-14T06:25:29Z |
| format | Article |
| id | doaj.art-9f63238483104507b21924a92b8063bf |
| institution | Directory Open Access Journal |
| issn | 1808-057X |
| language | English |
| last_indexed | 2024-12-14T06:25:29Z |
| publisher | Universidade de São Paulo |
| record_format | Article |
| series | Revista Contabilidade & Finanças |
| spelling | doaj.art-9f63238483104507b21924a92b8063bf2022-12-21T23:13:42ZengUniversidade de São PauloRevista Contabilidade & Finanças1808-057X287540742410.1590/1808-057x201704680S1519-70772017000300407Effects of IFRS adoption on tax avoidanceRenata Nogueira BragaABSTRACT This study investigates the association between mandatory International Financial Reporting Standards (IFRS) adoption and corporate tax avoidance. In this study, tax avoidance is defined as a reduction in the effective corporate income tax rate through tax planning activities, whether these are legal, questionable, or even illegal. Three measures of tax avoidance are used and factors at the country and firm level (that have already been associated with tax avoidance in prior research) are controlled. Using samples that range from 9,389 to 15,423 publicly-traded companies from 35 countries, covering 1999 to 2014, it is found that IFRS adoption is associated with higher levels of corporate tax avoidance, even when the level of book-tax conformity required in the countries and the volume of accruals are controlled, both of which are considered potential determinants of this relationship. Furthermore, the results suggest that after IFRS adoption, firms in higher book-tax conformity environments engage more in tax avoidance than firms in lower book-tax conformity environments. It is also identified that engagement in tax avoidance after IFRS adoption derives not only from accruals management, but also from practices that do not involve accruals. The main conclusion is that companies engage more in tax avoidance after mandatory IFRS adoption.http://www.scielo.br/scielo.php?script=sci_arttext&pid=S1519-70772017000300407&lng=en&tlng=enIFRStax avoidancebook-tax conformitytax planning |
| spellingShingle | Renata Nogueira Braga Effects of IFRS adoption on tax avoidance Revista Contabilidade & Finanças IFRS tax avoidance book-tax conformity tax planning |
| title | Effects of IFRS adoption on tax avoidance |
| title_full | Effects of IFRS adoption on tax avoidance |
| title_fullStr | Effects of IFRS adoption on tax avoidance |
| title_full_unstemmed | Effects of IFRS adoption on tax avoidance |
| title_short | Effects of IFRS adoption on tax avoidance |
| title_sort | effects of ifrs adoption on tax avoidance |
| topic | IFRS tax avoidance book-tax conformity tax planning |
| url | http://www.scielo.br/scielo.php?script=sci_arttext&pid=S1519-70772017000300407&lng=en&tlng=en |
| work_keys_str_mv | AT renatanogueirabraga effectsofifrsadoptionontaxavoidance |