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Shareholder’s Political Motives and Corporate Tax Avoidance

Asian Journal of Accounting and Governance

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Title Shareholder’s Political Motives and Corporate Tax Avoidance
 
Creator Utomo, Suryo
Palil, Mohd Rizal
Jaffar, Romlah
Ramli, Rosiati
 
Subject Corporate tax avoidance; corporate tax compliance; shareholder’s political motive; book-tax differences; long-run cash effective tax rates; fraud-risk theory
 
Description This paper describes the relationship between shareholder’s political motive and corporate tax avoidance using the Fraud-Risk Theory framework. Many corporate shareholders around the world actively participated in their country’s political arena, either as politicians or as donors to political parties. In order to maintain their political activities, they need easy, cheap and large sources of funds. One of the possible sources of funds is the undisbursed income tax payment to the government. However, this predicament has aroused the suspicion of taxation authorities on the extent of shareholder’s corporate tax compliance. Since corporate tax avoidance and shareholder’s political motives are attached to two different entities (corporations and individuals), it is not possible to measure the direct relationship between the variables. However, in this case the relationship will be partially measured. The first part measures the relationship between corporate ownership and corporate tax avoidance, and the second part measures the relationship between shareholder’s political motive and his ownership in the corporation. Results from multivariate data analysis show that there are significant relationships between variables in both partial relationships. Therefore, this study concludes that shareholder’s political motive is negatively related to corporate tax compliance level, and shareholder’s political motive is considered as factor that has significant negative influence on corporate tax avoidance’s decision.
 
Publisher Penerbit UKM
 
Contributor —
 
Date 2016-02-22
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://ejournal.ukm.my/ajac/article/view/7229
10.17576/ajag-2015-6-7229
 
Source Asian Journal of Accounting and Governance; Vol 6 (2015); 27-36
2180-3838
 
Language eng
 
Relation http://ejournal.ukm.my/ajac/article/view/7229/3816
 
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