Do common institutional owners' activisms deter tax avoidance? Evidence from an emerging economy

A. Athira and P.J. Jijo Lukose

Pacific-Basin Finance Journal, 2023, vol. 80, issue C

Abstract: We examine the association between common institutional ownership and tax avoidance in an institutional setting characterized by concentrated ownership and principal-principal agency conflict. We find a negative association between tax avoidance and common institutional ownership, and this relationship is stronger among firms with more analyst coverage and higher concentrated ownership. Overall, our results support the monitoring efficiency of institutions and their role in internalizing the negative externality of a firm's tax avoidance on common-industry peers. Further, the reduction in tax avoidance in firms with common institutional ownership is associated with a higher firm value. By demonstrating the role of common institutional owners in deterring tax aggressiveness, our study sheds light on the principal-principal agency cost of tax avoidance in emerging economies.

Keywords: Institutional investors; Ownership structure; Corporate governance; Tax avoidance (search for similar items in EconPapers)
JEL-codes: G23 G32 G34 H26 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0927538X23001610
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:80:y:2023:i:c:s0927538x23001610

DOI: 10.1016/j.pacfin.2023.102090

Access Statistics for this article

Pacific-Basin Finance Journal is currently edited by K. Chan and S. Ghon Rhee

More articles in Pacific-Basin Finance Journal from Elsevier
Bibliographic data for series maintained by Catherine Liu ().