A Theoretical Review on Corporate Tax Avoidance: Shareholder Approach versus Stakeholder Approach

J. Fin. Bank. Review 4 (3) 82–88 (2019)

7 Pages Posted: 6 Feb 2020

See all articles by GATR Journals Submitter

GATR Journals Submitter

Global Academy of Training and Research (GATR)

Nirmala Devi Mohanadas

Faculty of Business, Multimedia University, Malaysia

Abdullah Sallehhuddin Abdullah Salim

Student Affairs Division, Multimedia University

Suganthi Ramasamy

Multimedia University

Date Written: December 11, 2019

Abstract

Objective – Although corporate tax avoidance is a widely discussed topic in the literature, conflicts do emerge when it is analyzed through the context of primary corporate duty. Should companies, in managing their taxes, solely honor their obligation to increase shareholders' wealth or should they cater to the interests of all their stakeholders? Such conflicts are especially evident in the inconsistent empirical observations on how corporate tax avoidance relate to corporate social responsibility (CSR), which makes the dearth of theoretical analysis on this issue even more conspicuous. Taking into account the socio-political nature and human elements in corporate tax avoidance, theoretical analyses from social sciences' perspectives are becoming markedly crucial.

Methodology/Technique – This paper critically reviews the extant literature for discussions on how corporate tax avoidance is influenced by the dissenting approaches towards primary corporate duty.

Findings – By allowing an insight into how people act and the world they live in, these analyses form a constructive tool to rationalize and foretell managerial actions towards shareholders and stakeholders alike.

Novelty – It focuses particularly on the theories that are widely used to lend supports for such approaches. These theories are the agency theory, stakeholder theory, and legitimacy theory.

Type of Paper – Review.

Keywords: Corporate Tax Avoidance; Corporate Social Responsibility (CSR); Theoretical Analysis; Shareholder Approach; Stakeholder Approach; Agency Theory; Stakeholder Theory; Legitimacy Theory.

JEL Classification: G30, G32, G39

Suggested Citation

Submitter, GATR Journals and Mohanadas, Nirmala Devi and Salim, Abdullah Sallehhuddin Abdullah and Ramasamy, Suganthi, A Theoretical Review on Corporate Tax Avoidance: Shareholder Approach versus Stakeholder Approach (December 11, 2019). J. Fin. Bank. Review 4 (3) 82–88 (2019), Available at SSRN: https://ssrn.com/abstract=3511518

GATR Journals Submitter (Contact Author)

Global Academy of Training and Research (GATR) ( email )

Suite 15
Taman Bukit Angkasa, Kuala Lumpur 59200
Malaysia

Nirmala Devi Mohanadas

Faculty of Business, Multimedia University, Malaysia ( email )

Jalan Multimedia
Cyberjaya, Selangor 63100
Malaysia

Abdullah Sallehhuddin Abdullah Salim

Student Affairs Division, Multimedia University

Jalan Multimedia
Cyberjaya, Selangor 63100
Malaysia

Suganthi Ramasamy

Multimedia University ( email )

Jalan Ayer Keroh Lama
Melaka 75450
Malaysia

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