TITLE:
Does Corporate Tax Avoidance Influence Firm Leverage of Vietnamese Listed Companies?
AUTHORS:
Hoang Thi Mai Khanh, Nguyen Vinh Khuong
KEYWORDS:
Corporate Tax Avoidance, Firm Leverage, Trade-Off Theory, Emerging Market
JOURNAL NAME:
Theoretical Economics Letters,
Vol.9 No.4,
April
26,
2019
ABSTRACT: Corporate tax avoidance is defined by reducing taxes
for any particular purpose, extending from the gracious remission of taxes
expense arising from inconsistent customs for financial statements. In this
paper, we examine the association between corporate tax avoidance and firm
leverage. The trade-off theory is significant for explaining the relationship
between tax avoidance behaviour and firm leverage. Consequently, the company
directs to allow tax avoidance behaviour and accept the company’s leverage at a
higher level than usual. The consequences commence to transaction costs,
financial risks when viewing at company health from financial statements, but
will maintain the company achieves the expected tax rates. We utilize STATA to
test GMM on a sample of Vietnam listed firms data over the period 2010-2016. The
sample data of 125 companies in the period from 2010 to 2016, all 875
observations were used for the analysis. The results show that there is a
significant positive relationship between corporate tax avoidance on firm
leverage in Vietnam. The research is essential to the regulator in controlling
tax costs for companies, for investors in analyzing a corporate financial
situation.