Organizational Capital, Corporate Tax Avoidance, and Firm Value

Journal of Corporate Finance, Volume 70, October 2021.

63 Pages Posted: 22 Jul 2021 Last revised: 6 May 2022

See all articles by Mostafa Monzur Hasan

Mostafa Monzur Hasan

Macquarie University

Gerald J. Lobo

University of Houston - C.T. Bauer College of Business

Buhui Qiu

University of Sydney Business School; Financial Research Network (FIRN)

Date Written: July 21, 2021

Abstract

We show that firms with higher levels of organizational capital (OC) exhibit higher levels of tax avoidance and that shareholders view tax avoidance of high OC firms as value-enhancing. We also show that the OC-tax avoidance relation mainly manifests in firms with good internal governance and information environment and in firms that face tight financial constraints. In addition, we document that tax avoidance by high OC firms increases future cash flow and that high OC firms are more likely to invest in tax haven subsidiaries. Overall, our evidence suggests that OC enhances firm’s tax efficiency.

Keywords: Organizational capital, Tax Avoidance, Firm Value

JEL Classification: E22, G32, H25, H26

Suggested Citation

Hasan, Mostafa Monzur and Lobo, Gerald J. and Qiu, Buhui, Organizational Capital, Corporate Tax Avoidance, and Firm Value (July 21, 2021). Journal of Corporate Finance, Volume 70, October 2021., Available at SSRN: https://ssrn.com/abstract=3890520

Mostafa Monzur Hasan

Macquarie University ( email )

Level 3, Building 4ER,
Sydney, NSW 2109
Australia

HOME PAGE: http://https://researchers.mq.edu.au/en/persons/mostafa-hasan

Gerald J. Lobo (Contact Author)

University of Houston - C.T. Bauer College of Business ( email )

Houston, TX 77204-6021
United States
713-743-4838 (Phone)
713-743-4828 (Fax)

HOME PAGE: http://www.bauer.uh.edu/acct/acctprofile.asp?search=Gerald%20Lobo

Buhui Qiu

University of Sydney Business School ( email )

Room 513, The Codrington Building
The University of Sydney
Sydney, NSW 2006
Australia
+61 2 9036 6435 (Phone)
+61 2 9351 6461 (Fax)

HOME PAGE: http://sydney.edu.au/business/staff/buhuiq

Financial Research Network (FIRN)

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

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