Components of book tax differences, corporate social responsibility and equity value

Figures & data

Figure 1. Research framework.

Table 1. Pearson correlation

n = 2984	MVt+3	BVE	PBT	PD	TD	STRD	CSR	PD_CSR	TD_CSR	STRD_CSR	LEV	CAPINT	EM	FS	DIV
MVt+3	1.000
BVE	0.279***	1.000
PBT	0.764***	0.418***	1.000
PD	0.033*	0.012	0.072***	1.000
TD	0.028	0.023	0.022	−0.986***	1.000
STRD	0.167***	0.042**	0.212***	0.039**	−0.006	1.000
CSR	0.283***	−0.018	0.148***	−0.001	0.007	0.063***	1.000
PD_CSR	0.039**	0.009	0.077***	0.999***	−0.982***	0.046**	0.004	1.000
TD_CSR	0.027	0.018	0.021	−0.985***	0.999***	−0.009	0.007	−0.982***	1.000
STRD_CSR	0.162***	0.022	0.200***	0.037**	−0.007	0.977***	0.097***	0.046**	−0.013	1.000
LEV	0.056***	0.001	0.025	−0.019	0.020	0.024	0.170***	−0.017	0.019	0.040**	1.000
CAPINT	0.008	−0.029	−0.052***	−0.001	0.014	0.023	0.109***	0.003	0.013	0.024	−0.096***	1.000
EM	0.087***	0.224***	0.317***	0.006	0.032*	−0.008	−0.027	0.006	0.034*	−0.020	0.003	−0.318***	1.000
FS	0.053***	−0.009	0.045**	0.022	−0.003	0.190***	0.101***	0.027	−0.004	0.187***	−0.085***	0.276***	−0.095***	1.000
DIV	0.019	−0.002	0.004	−0.003	0.000	−0.002	0.027	−0.003	0.000	−0.002	−0.024	0.023	0.004	0.003	1.000

***, ** and * indicate significance at 1%, 5% and 10%, respectively.

Table 2. Descriptive statistics

n = 2,984	Mean	Minimum	Maximum	Standard deviation
EVt+3	1.8150	0.0089	25.7471	2.0103
BVE	1.0514	0.0622	27.9860	0.5587
PBT	0.1922	−0.3098	4.8502	0.2443
PD	0.0291	−1.4961	42.6488	0.7933
TD	−0.0120	−42.5894	1.7623	0.7863
STRD	0.0014	−0.0301	0.1422	0.0083
CSR	18.0442	8.1356	38.6441	3.9112
LEV	0.0805	0.0000	0.9812	0.1079
CAPINT	0.2628	0.0000	2.4508	0.3015
EM	0.0059	−1.6102	2.9363	0.2598
FS	18.3781	0.0000	100.0000	26.5340
DIV	0.4539	0.0000	175.2917	4.1835

EV_t+3 = Equity value 3 months post accounting year-end, BVE = Book value of equity, PBT = Profit before taxation, PD = Permanent differences, TD = Temporary differences, STRD = Statutory tax rates differences, CSR = Corporate social responsibilities, LEV = Leverage, CAPINT = Capital intensity, EM = Earnings management, FS = Foreign sales, DIV = Dividend

Table 3. Panel regression results

Dependant variable = EVt+3	Model 1	Model 2
BVE	0.1350	0.2010**
	(1.62)	(2.44)
PBT	5.5752***	5.5809***
	(12.82)	(12.99)
PD	−1.8168***	−1.9615***
	(−4.10)	(−4.47)
TD	−1.7808***	−1.9398***
	(−4.03)	(−4.43)
STRD	0.7888	2.0498
	(0.24)	(0.57)
CSR	0.0950***	0.0983***
	(7.63)	(8.60)
PD_CSR		0.2693***
		(3.49)
TD_CSR		0.2600***
		(3.18)
STRD_CSR		−0.8370
		(−1.29)
LEV	0.1856	0.1259
	(0.57)	(0.39)
CAPINT	−0.0220	−0.0523
	(−0.11)	(−0.27)
EM	−0.6138***	−0.6274***
	(−4.46)	(−4.42)
FS	0.0005	0.0002
	(0.31)	(0.12)
DIV	0.0033**	0.0036**
	(2.19)	(2.20)
Constant	−1.4125***	−1.5319***
	(−6.26)	(−7.27)
Industry dummy	Yes	Yes
R-squared	47.38%	48.47%
n	2984	2984
Wald chi^2	596.67***	721.63***
White	1189.06***	1385.52***
Breusch-Pagan	1992.56***	2048.97***

Cross-section clustered Eicker-Huber-White adjusted t-statistics are represented by the figures in the parentheses.

***, ** indicate significance at 1% and 5%, respectively.

EV_t+3 = Equity value 3 months post accounting year-end, BVE = Book value of equity, PBT = Profit before taxation, PD = Permanent differences, TD = Temporary differences, STRD = Statutory tax rates differences, CSR = Corporate social responsibilities, PD_CSR = Interaction between permanent differences and corporate social responsibilities, TD_CSR = Interaction between temporary differences and corporate social responsibilities, STRD_CSR = Interaction between statutory tax rates differences and corporate social responsibilities, LEV = Leverage, CAPINT = Capital intensity, EM = Earnings management, FS = Foreign sales, DIV = Dividend