MEASURING TAX AVOIDANCE USING EFFECTIVE TAX RATE: CONCEPTS AND IMPLICATIONS

Edosa Aronmwan and Izilin Mavis Okaiwele ()
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Izilin Mavis Okaiwele: University of Benin, Benin City, Postal: Department of Accounting, Faculty of Management Sciences, https://journal.citn.org/

Journal of Taxation and Economic Development, 2019, vol. 18, issue 1, 1-13

Abstract: Lack of consensus on the multifaceted concept of tax avoidance has caused us to witness a plethora of proxies that have been developed to measure and capture tax avoidance for the sake of empirical analysis. Therefore, this study contributes to the literature on tax avoidance as it seeks to find out the similarity or differences between tax avoidance measures with specific emphasis on effective tax rate based measures. Conducting the ANOVA and the Games Howell multiple comparison tests on a sample of 673 unbalanced firm-year observations of Nigerian companies, the study found that there is a significant difference between the examined measures while the Games Howell test further showed that the H & S measure differs significantly from the ETR based measures. Researchers are hereby advised to consider their research objectives before deciding on the measure of tax avoidance to use in their study.

Keywords: Corporate Tax Avoidance; Effective Tax Rate; Henry and Sansing Measure; Annual ETR; Long-run ETR (search for similar items in EconPapers)
JEL-codes: H25 M41 (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:ris:jotaed:0001

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