The Effect of Corporate Diversification on Tax Aggressiveness in Brazilian Companies

24 Pages Posted: 3 Jun 2019

See all articles by Antonio Lopo Martinez

Antonio Lopo Martinez

University of Coimbra; University of Salamanca

Aline Maioli Rodrigues

affiliation not provided to SSRN

Date Written: May 10, 2019


This research aims to verify whether firms that operate in several different business sectors are more tax aggressive in comparison to firms that operate in a single or a few segments. The study analyzes a sample of 4,280 firms/year, listed in the Brazilian stock exchange B3 in the period from 2010 to 2017. It was observed that most of the companies operate in one or two business segments. To verify the existence of a relationship between diversification and tax aggressiveness, we used a multiple linear regression model with fixed effect panel data for firm and year. Also, we used the logit model with binary response for the explanatory variable. Two measurements of tax aggressiveness were applied, the ETR (effective tax rate) and the ETR LONG (long-run effective tax rates). This type of research is an innovation in Brazil, not yet explored in the literature. The results showed that more diversified firms are more likely to be tax aggressive, in comparison to single-segment firms. Therefore, the results indicate that among Brazilian listed companies, there is a positive relationship between the number of segments in which they are listed and the level of tax aggressiveness. Among the main contributions of the research, we emphasize the better understanding of the phenomenon of tax aggressiveness, its causes and determinants, implications for information users (particularly tax regulators), and implications for the management that identifies a possible tax advantage in corporate diversification.

Keywords: Tax aggressiveness; Corporate diversification; Single-segment

JEL Classification: M40, K34

Suggested Citation

Martinez, Antonio Lopo and Rodrigues, Aline Maioli, The Effect of Corporate Diversification on Tax Aggressiveness in Brazilian Companies (May 10, 2019). Available at SSRN: or

Antonio Lopo Martinez (Contact Author)

University of Coimbra ( email )

Pátio das Escolas

University of Salamanca ( email )

Campus Miguel de Unamuno
Salamanca, Salamanca 23007

Aline Maioli Rodrigues

affiliation not provided to SSRN

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