La gouvernance d'entreprise affecte-t-elle la planification fiscale? (document en anglais)

ISSN 2320-5407 International Journal of Advanced Research (2013), Volume 1, Issue 10, 864-873

864

Journal homepage: http://www.journalijar.com INTERNATIONAL JOURNAL

OF ADVANCED RESEARCH

RESEARCH ARTICLE

Does Corporate Governance affect tax planning? Evidence from American companies

Dr Aliani Khaoula

FIESTA ISG, University of Tunis

Manuscript Info Abstract

Manuscript History: Received: 12 November 2013 Final Accepted: 29 November 2013 Published Online: December 2013 Key words: Agency theory, corporate social responsibility, tax governance, American firms JEL Classification: H29, M14, G34.

The objective of this research is to investigate the influence of corporate governance on tax planning. Our paper adopts the agency theory and the corporate social responsibility point view to discuss haw companies can achieve a successful tax planning strategy. Using a sample of 300 American companies for the period study 1996-2009, we find that the presence of corporate social responsibility committee, stock options and independent directors constitute fundamental factors of corporate tax planning. However, we don‟t find significant relations between board size and the corporate effective tax rates.

Copy Right, IJAR, 2013,. All rights reserved.

Introduction

The study of the interactions between corporate governance and taxation is considered a classical and recent topic at the same time. In fact, this double perception is due to the evolutions of the taxation studies during the last decade. The attention paid to the taxation increases and the companies become increasingly conscious of the importance of a new reconsideration of the tax variables at the time of decisions making.

The concept of the corporate social responsibility and its effects on the tax field, the development of competences as regards taxation, the need for revealing relevant tax information for the investors or the need for establishing a management system of the tax risks produced an emergent current of the literature based on an economic and legal context.

Most studies treating the corporate governance concentrate on the suitable regulation framework for the introduction of the principles of the corporate governance. Consequently, the attention was given to the legal practices and information disclosure and to the principles of ethical control. However, little attention was paid to the relation between corporate governance and tax optimization.

The succession of the scandals on a world level especially in the United States and in Europe and the multiplicity of the aggressive tax shelters focussed on the need for reconsidering the relations between corporate governance and taxation.

The review of the recent theoretical literature enabled us to highlight the role assigned to the corporate governance in the success of tax optimization. Thus, a new orientation is developed to insist on the mobilization of the components of corporate governance.

We contribute to the large literature on tax planning by proposing a complementary theoretical framework. We add a new angle to existing studies by involving the influence of corporate social responsibility on corporate tax planning.

The rest of paper is organized as follows. In the next part, we present the theoretical framework of our study. Then, we expose our sample and data. Next, we present the descriptive statistics and empirical results. The final section concludes.

ISSN 2320-5407 International Journal of Advanced Research (2013), Volume 1, Issue 10, 864-873

865

2. Agency Theory: tax perspective

Inspired by the role of taxes in diffusion property in the American economy, Berle and Means (1930) launched the study of the agency problem. They showed that directors named by shareholders can pursue their own interests. (Desai, 2007) The relation between taxation and corporate governance was neglected during the later decades.

While the specialists in public finance did not incorporate the agency problems in their analysis, a recent literature suggests that the reconsideration of this relation can produce new streams of research in the real effects of the fiscal policies on the corporate governance. The rediscovery of this link was stimulated by two developments.

Firstly, the abundance of the tax shelter showed the advantage of the corporate governance particularly in the context of managerial malfeasance. Secondly, the extent of the corporate tax rates is highly related to the levels of property concentration.

Desai et al., (2007) showed that the interaction between corporate governance and taxation produces three distinct predictions which can be tested within different frameworks. Initially, the characteristics of the tax code, like the structure of the rates and nature of their implementation, the influence of the managerial actions and thus the measurement of the agency problem.

Secondly, the nature of the corporate governance, the protections given to the external investors, the influence of the tax code. Thirdly, tax avoidance is not represented simply in a transfer of financial resources from state to shareholders; rather, managers can capture a share of the advantages of tax avoidance.

In answer to the advanced interrogations, Desai et al., (2007) develop a model which presents a series of original assumptions of the reciprocal action between the robustness of the institutions of the corporate governance and the tax code. Their model predict that the increases in the corporate tax rates should cause greater increases in benefit of institutions having a strong corporate governance. The managers or the shareholders control of the companies with weaker governance can avoid taxes.

Desai and Dharmapala (2009) examine tax optimization within the conceptual framework of agency; they suggest that the opportunist managers employ the techniques of tax optimization to advance their own interests with those of the shareholders. The latter often do not encourage the activities of tax minimization because they generate costs which exceed tax incentives due to the managerial opportunism.

Within a framework of agency, Chen et al., (2010) and Desai and Dharmapala (2009) argue that the activities of tax planning can facilitate managerial opportunism such as the earnings management and the diversion of resources.

Seidman and Stomberg (2011)

...