Business, Management and Accounting
4 years ago

Corporate tax avoidance boosts firm value, benefiting shareholders and governance.

The Review of Economics and Statistics
Corporate Tax Avoidance and Firm Value
Mihir A. Desai, Dhammika Dharmapala

Paper Summary

Corporate tax avoidance can impact firm value, depending on how well a company is governed. By analyzing differences in reported income, researchers found that tax avoidance affects firm value due to agency issues between shareholders and managers. Changes in tax regulations also support this finding. This suggests that tax avoidance isn't just about benefiting shareholders at the expense of the state, but also reflects problems in how companies are managed.

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