Topic
Corporate governance
About: Corporate governance is a research topic. Over the lifetime, 118591 publications have been published within this topic receiving 2793582 citations.
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TL;DR: This paper examined the empirical association between corporate social responsibility (CSR) and tax avoidance and found that firms with excessive irresponsible CSR activities have a higher likelihood of engaging in tax-sheltering activities and greater discretionary/permanent book-tax differences.
Abstract: We examine the empirical association between corporate social responsibility (CSR) and tax avoidance. Our findings suggest that firms with excessive irresponsible CSR activities have a higher likelihood of engaging in tax-sheltering activities and greater discretionary/permanent book-tax differences. Moreover, at the onset of FASB Interpretation No. 48, these firms have more uncertain tax positions; also, these firms' initial tax positions are likely supported by weaker facts and circumstances as indicated by their larger post-FIN 48 settlements with tax authorities and their higher likelihood of a net decrease in the overall level of uncertain tax positions after FIN 48. Collectively, these results suggest that firms with excessive irresponsible CSR activities are more aggressive in avoiding taxes, lending credence to the idea that corporate culture affects tax avoidance. Data Availability: Data are available from public sources identified in the study.
442 citations
TL;DR: In this article, the authors contribute to the reliable and valid measurement of this important but hard-to-measure measure, by comparing different industries' varying degrees of managerial discretion or latitude of action.
Abstract: Industries differ widely in how much managerial discretion, or latitude of action, they allow. This research contributes to the reliable and valid measurement of this important but hard-to-measure ...
441 citations
TL;DR: In this paper, the authors examine the association between corporate governance mechanisms and disclosure transparency measured by the level of Internet financial reporting (IFR) behavior, and find that firms with weak shareholders rights, a lower percentage of blockholder ownership, a higher percentage of independent directors, a more diligent audit committee, and a high percentage of audit committee members that are considered financial experts are more likely to engage in IFR.
441 citations
Abstract: This study tests the agency cost hypothesis in the context of geographic earnings disclosures. The agency cost hypothesis predicts that managers, when not monitored by shareholders, make self-maximizing decisions that may not necessarily be in the best interest of shareholders. These decisions include aggressively growing the firm, which reduces profitability and destroys firm value. Geographic earnings disclosures provide an interesting context to examine this issue. Beginning with Statement of Financial Accounting Standards No. 131 (SFAS 131), most U.S. multinational firms are no longer required to disclose earnings by geographic area (e.g., net income in Mexico or net income in East Asia). Such nondisclosure potentially reduces the ability of shareholders to monitor managers' decisions related to foreign operations. Using a sample of U.S. multinationals with substantial foreign operations, we find that nondisclosing firms, relative to firms that continue to disclose geographic earnings, experience greater expansion of foreign sales, produce lower foreign profit margins, and have lower firm value in the post–SFAS 131 period. Our conclusions are strengthened by the fact that these differences do not exist in the pre–SFAS 131 period and do not relate to domestic operations. We find differences in the predicted direction only for foreign operations and only after adoption of SFAS 131. Our results are robust to the inclusion of an extensive set of control variables related to alternative corporate governance mechanisms, operating performance, and the firm's information environment. Overall, the results are consistent with the agency cost hypothesis and the important role of financial disclosures in monitoring managers.
441 citations