Abstract
We show that firms with higher levels of organizational capital (OC) exhibit higher levels of tax avoidance and that shareholders view tax avoidance of high OC firms as value-enhancing. We also show that the OC-tax avoidance relation mainly manifests in firms with good internal governance and information environment and in firms that face tight financial constraints. In addition, we document that tax avoidance by high OC firms increases future cash flow and that high OC firms are more likely to invest in tax haven subsidiaries. Overall, our evidence suggests that OC enhances firm’s tax efficiency.
Original language | English |
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Article number | 102050 |
Pages (from-to) | 1-27 |
Number of pages | 27 |
Journal | Journal of Corporate Finance |
Volume | 70 |
Early online date | 23 Jul 2021 |
DOIs | |
Publication status | Published - Oct 2021 |
Keywords
- Firm value
- Organizational capital
- Tax avoidance