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Determinants of effective corporate tax rate. Empirical evidence from listed companies in Eastern European Stock Exchanges

Georgeta Vintila, Radu Alin Păunescu and Ştefan Gherghina ()
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Radu Alin Păunescu: Bucharest University of Economic Studies, Romania

Theoretical and Applied Economics, 2017, vol. XXIV, issue Special, 37-46

Abstract: The aim of the paper is to examine the determinants of effective corporate tax rate for three listed companies from Eastern European Stock Exchanges - Bulgaria, Hungary, and Romania, for the period 2006-2015. Using multivariate regressions and different estimation methods (data panels with OLS EGLS and quantile regressions) we studied the link between the effective corporate tax rate and profitability (ROA and ROE), indebtedness (long-term debt, debt-on-equity) and firm-level control variables (firm size and year-to-year asset variation). Empirical results supported the idea that for Romania, Bulgaria and Hungary managers are focused on the financial management, especially on profitability, and less focused on fiscal management, in part, due to the lower taxation. The negative link between profitability and the effective corporate tax rate implies the idea that a profitable company is implicitly able to lower its effective tax rate without using tax avoidance.

Keywords: effective corporate tax rate; political power; multivariate regressions. (search for similar items in EconPapers)
Date: 2017
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Handle: RePEc:agr:journl:v:xxiv:y:2017:i:special:p:37-46