Organizational capital, corporate tax avoidance, and firm value

Mostafa Monzur Hasan, Gerald J. Lobo and Buhui Qiu ()

Journal of Corporate Finance, 2021, vol. 70, issue C

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 firms' tax efficiency.

Keywords: Organizational capital; Tax avoidance; Firm value (search for similar items in EconPapers)
JEL-codes: E22 G32 H25 H26 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (39)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:70:y:2021:i:c:s0929119921001723

DOI: 10.1016/j.jcorpfin.2021.102050

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