The Tell‐Tale Tone: Negative Tone Disclosure and Tax Avoidance in MENA Banks

Naima Lassoued, Imen Khanchel and Mohamed Malek Belhoula

Managerial and Decision Economics, 2025, vol. 46, issue 8, 4155-4169

Abstract: This study examines the relationship between negative reporting tone in annual reports and tax avoidance practices in a panel of 63 banks operating in seven Middle Eastern and North African (MENA) countries observed over the 2012–2022 period. Using textual analysis based on the Loughran and McDonald dictionary to measure negative tone, we investigate opposing theoretical perspectives—the tax obfuscation hypothesis and the tax compliance hypothesis. Multivariate regression analysis reveals a significant inverse relationship between negative tone and tax avoidance, supporting the tax compliance perspective derived from signaling theory. Further analyses show that this relationship is strengthened by state, institutional, and foreign ownership, as well as by CEO duality and BIG 4 audit engagements. Additionally, bank‐specific characteristics including financial complexity, operational efficiency, income diversification, and Islamic banking principles significantly moderate the tone–tax avoidance relationship. These results have important implications for regulators and policymakers seeking to enhance tax compliance monitoring and strengthen transparency initiatives in the banking sector.

Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1002/mde.70008

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:wly:mgtdec:v:46:y:2025:i:8:p:4155-4169

Access Statistics for this article

Managerial and Decision Economics is currently edited by Antony Dnes

More articles in Managerial and Decision Economics from John Wiley & Sons, Ltd.
Bibliographic data for series maintained by Wiley Content Delivery ().