An empirical evaluation of measures of corporate tax aggressiveness: The impact of inherent idiosyncrasies arising between accounting and taxation systems

Tahir, Nadeem Ahmed

An empirical evaluation of measures of corporate tax aggressiveness: The impact of inherent idiosyncrasies arising between accounting and taxation systems

Tahir, Nadeem Ahmed

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Publication Type:: Thesis
Issue Date:: 2024

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Field	Value	Language
dc.contributor.author	Tahir, Nadeem Ahmed
dc.date.accessioned	2025-03-28T03:55:01Z
dc.date.available	2025-03-28T03:55:01Z
dc.date.issued	2024
dc.identifier.uri	http://hdl.handle.net/10453/186269
dc.description	University of Technology Sydney. Faculty of Business.	en_US.UTF-8
dc.description.abstract	This thesis extends the tax avoidance literature by refining the effective tax rate (ETR) as a better proxy for corporate tax aggressiveness (TAG). It challenges the commonly used ETR restriction of 0 to 1, which is prone to measurement errors and includes items unrelated to TAG, by proposing a more rigorous and robust method for creating ETR restrictions that closely proxy TAG. Evidence shows that this method mitigates extreme observations and yields an ETR restriction that better reflects TAG. Additionally, incorporating goodwill impairment and firm growth as control variables aids in addressing the inherent idiosyncrasies arising between accounting and taxation systems, validating the proposed ETR restriction. Triangulating, the selected studies using this method identify an optimal ETR (Cash ETR) restriction of 0.03 to 0.33 (0 to 0.33) for Australian-centric studies and the range of 0 to 0.42 for U.S. studies, which aligns closely with Schwab et al. (2022)’s recommendation of a 0.05 to 0.40 range. While this thesis constructs an adjusted ETR by eliminating all items within the tax reconciliation notes unrelated to TAG, limitations remain. Researchers can use ETR rate reconciliation data to construct an adjusted ETR to further explore non-linear ETR associations.	en_US.UTF-8
dc.format	Thesis (PhD)
dc.language.iso	en_US	en_US.UTF-8
dc.relation	https://opus.lib.uts.edu.au/bitstream/10453/186269/1/thesis.pdf
dc.rights	info:eu-repo/semantics/openAccess
dc.rights	The author owns the copyright in this thesis including all reproduction and reuse rights for the work. The work may not be altered without the permission of the copyright owner. Attribution is essential when quoting or paraphrasing from this thesis.
dc.rights	© 2024 Nadeem Ahmed Tahir
dc.rights	au.edu.uts.lib/cph
dc.title	An empirical evaluation of measures of corporate tax aggressiveness: The impact of inherent idiosyncrasies arising between accounting and taxation systems	en_US.UTF-8
dc.type	Thesis
utslib.copyright.status	open_access	*

Abstract:

This thesis extends the tax avoidance literature by refining the effective tax rate (ETR) as a better proxy for corporate tax aggressiveness (TAG). It challenges the commonly used ETR restriction of 0 to 1, which is prone to measurement errors and includes items unrelated to TAG, by proposing a more rigorous and robust method for creating ETR restrictions that closely proxy TAG. Evidence shows that this method mitigates extreme observations and yields an ETR restriction that better reflects TAG. Additionally, incorporating goodwill impairment and firm growth as control variables aids in addressing the inherent idiosyncrasies arising between accounting and taxation systems, validating the proposed ETR restriction. Triangulating, the selected studies using this method identify an optimal ETR (Cash ETR) restriction of 0.03 to 0.33 (0 to 0.33) for Australian-centric studies and the range of 0 to 0.42 for U.S. studies, which aligns closely with Schwab et al. (2022)’s recommendation of a 0.05 to 0.40 range. While this thesis constructs an adjusted ETR by eliminating all items within the tax reconciliation notes unrelated to TAG, limitations remain. Researchers can use ETR rate reconciliation data to construct an adjusted ETR to further explore non-linear ETR associations.

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http://hdl.handle.net/10453/186269