Asset Redeployability and Corporate Tax Avoidance

36 Pages Posted: 19 Feb 2019

See all articles by Huu Nhan Duong

Huu Nhan Duong

Monash University - Department of Banking and Finance; Financial Research Network (FIRN)

My Nguyen

RMIT- School of Economics, Finance and Marketing

Date Written: December 17, 2018

Abstract

We find that firms with more asset redeployability, which is defined as the extent to which the assets have greater alternative uses outside the firm, have higher cash effective tax rates. Firms with more redeployable assets also reduce their engagement in other aggressive forms of tax avoidance including long-term tax planning or tax shelters. The negative effect of asset redeployability on tax avoidance is more pronounced for firms with greater financial constraints or with stronger internal and external corporate governance. Overall, our findings suggest that redeploying assets affect firm liquidation values and external financing frictions, which in turn induces precautionary motives of tax avoidance.

Keywords: Asset redeployability; tax avoidance; financial constraints

JEL Classification: G12, G14, G31, G32

Suggested Citation

Duong, Huu Nhan and Nguyen, My, Asset Redeployability and Corporate Tax Avoidance (December 17, 2018). Available at SSRN: https://ssrn.com/abstract=3338012

Huu Nhan Duong (Contact Author)

Monash University - Department of Banking and Finance ( email )

Melbourne
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

My Nguyen

RMIT- School of Economics, Finance and Marketing ( email )

445 Swanston Street
Melbourne, Victoria 3001
Australia
+61 3 9925 5450 (Phone)

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
5
Abstract Views
48
PlumX Metrics