Financial Transparency and Tax Avoidance Risks for Manufacturing Companies: A Stock Market Analysis of Tax Compliance in Romania

Adrian Bojan and Monica Violeta Achim
Additional contact information
Adrian Bojan: Babes-Bolyai University, Cluj-Napoca, Romania
Monica Violeta Achim: Babes-Bolyai University, Cluj-Napoca, Romania

Journal of Financial Studies, 2025, vol. 10, issue 18, 30-60

Abstract: This study explores the phenomenon of tax avoidance and earnings management whereby companies intentionally adjust their financial reporting to minimize tax liabilities. An applied analysis of the financial performance of 60 companies listed on the Romanian Stock Exchange, using data collected from the balance sheet, profit and loss statement and cash flow statement over a two-year period. The research sheds light on the mechanisms through which companies resort to earnings management practices to disguise real revenues and reduce tax liabilities, thus affecting reporting transparency. The results provide a valuable framework for investors in which the manufacturing sector is emphasized, as the effects indicate a reduction in confidence and increased volatility in financial performance. These survey findings are relevant for investors as they highlight the risks associated with investing in companies that adopt such practices. The analysis also provides important insights into the identification of companies with high tax compliance, which is essential for the design of long-term stakeholder decisions. The paper emphasizes the need to improve tax and accounting regulations to reduce the risks of tax avoidance in the Romanian stock market environment.

Keywords: Earnings management; tax avoidance; tax shelter; insider transactions; earnings quality; real earnings; accrual earnings. (search for similar items in EconPapers)
JEL-codes: H26 M41 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://revista.isfin.ro/wp-content/uploads/2025/01/2.-Bojan-A.-et.pdf (application/pdf)
https://revista.isfin.ro/2025/01/09/financial-tran ... mpliance-in-romania/ (text/html)

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:fst:rfsisf:v:10:y:2025:i:18:p:30-60

DOI: 10.55654/JFS.2025.10.18.02

Access Statistics for this article

Journal of Financial Studies is currently edited by Raluca Ladaru

More articles in Journal of Financial Studies from Institute of Financial Studies Contact information at EDIRC.
Bibliographic data for series maintained by Cosmin Catalin Olteanu ().