Effect of corporate tax avoidance activities on firm bankruptcy risk |
| |
Institution: | 1. Deakin University, Australia;2. Monash University, Australia;3. University of Southern Queensland, Australia;1. College of Business, North Dakota State University, Dept. 2410, P.O. Box 6050, Fargo, ND 58108, United States;2. College of Business Administration, Kansas State University, 2097 Business Building, 1301 Lovers Lane, Manhattan, KS 66506, United States |
| |
Abstract: | Corporate tax avoidance has been shown to raise the cost of bank debt and lower credit and bond ratings. However, it is unclear whether tax avoidance actually increases a firm’s bankruptcy risk or whether it is just viewed negatively by banks and rating agencies. We find that firms engaging in tax avoidance and firms that are thinly capitalized face higher bankruptcy risk. To account for endogeneity and functional form misspecification, we verify our results using instrumental variable and propensity score matching methods. Our findings are consistent with the view that tax avoidance is a risk-enhancing activity. |
| |
Keywords: | Tax avoidance Bankruptcy risk Thin capitalization Tax risk |
本文献已被 ScienceDirect 等数据库收录! |
|