The Effect of a Company’s Sustainable Competitive Advantage on Their Tax Avoidance Strategy—Focusing on Market Competition in Korea

Yoojin Shin and Jung-Mi Park ()
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Yoojin Shin: Division of Business, Chosun University, Gwangju 61452, Republic of Korea
Jung-Mi Park: Division of Business Administration, Wonkwang University, Iksan 54538, Republic of Korea

Sustainability, 2023, vol. 15, issue 10, 1-15

Abstract: This study analyzes whether a company’s competitive advantage affects a company’s tax avoidance strategy. Additionally, it analyzes whether these effects depend on the level of competition in the market to which the company belongs. This is because a company’s tax avoidance strategy may vary depending on the characteristics of the firm, such as the financial position and governance structure, the market dominance, or the degree of competition in the market to which the company belongs and it can act as an incentive for tax avoidance. Results of this study is follows. Tax avoidance increases significantly as a company’s market share increases. Also, if the sample is divided by the level of market competition and analyzed, the results show that tax avoidance increases significantly with the increase in a company’s market power only in oligopolistic markets with low market competition. Therefore, it can be interpreted that the effect of a company’s market power on tax avoidance varies depending on the level of competition in the market.

Keywords: tax avoidance; tax strategies; market competition (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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