Does tax aggressiveness and cost of debt affect firm performance? The moderating role of political connections

References

• Abdullah, H., Iqbal, M. S., & Iqbal, M. S. (2022). Impact of working capital management on firm profitability and liquidity: The moderating role of family ownership. Accounting Research Journal, 35(5), 676–17. https://doi.org/10.1108/ARJ-07-2021-0212
   Web of Science ®Google Scholar
• Abor, J. (2005). The effect of capital structure on profitability: An empirical analysis of listed firms in Ghana. The Journal of Risk Finance, 6(5), 438–445. https://doi.org/10.1108/15265940510633505
   Google Scholar
• Afonso, T. L., Marques, A. C., & Fuinhas, J. A. (2021). Does energy efficiency and trade openness matter for energy transition? Empirical evidence for countries in the Organization for Economic Co-operation and Development. Environment, Development and Sustainability, 23(9), 13569–13589. https://doi.org/10.1007/s10668-021-01228-z
   Web of Science ®Google Scholar
• Akeem, L. B., Terer, E. K., Kiyanjui, M. W., & Kayode, A. M. (2014). Effects of capital structure on firm’s performance: Empirical study of manufacturing companies in Nigeria. Journal of Finance and Investment Analysis, 3(4), 39–57. http://www.scienpress.com/Upload/JFIA%2FVol%203_4_4.pdf
   Google Scholar
• Al-ahdal, W. M., Alsamhi, M. H., Tabash, M. I., & Farhan, N. H. (2020). The impact of corporate governance on financial performance of Indian and GCC listed firms: An empirical investigation. Research in International Business and Finance, 51, 101083. https://doi.org/10.1016/j.ribaf.2019.101083
   Web of Science ®Google Scholar
• Ali, A., & Faisal, S. (2020). Capital structure and financial performance: A Case of Saudi Petrochemical Industry. The Journal of Asian Finance, Economics, and Business, 7(7), 105–112. https://doi.org/10.13106/jafeb.2020.vol7.no7.105
   Web of Science ®Google Scholar
• Ali, M., Sohail, A., Khan, L., & Puah, C. H. (2019). Exploring the role of risk and corruption on bank stability: Evidence from Pakistan. Journal of Money Laundering Control, 22(2), 270–288. https://doi.org/10.1108/JMLC-03-2018-0019
   Web of Science ®Google Scholar
• Altaf, N., & Shah, F. (2017). Working capital management, firm performance and financial constraints: Empirical evidence from India. Asia-Pacific Journal of Business Administration, 9(3), 206–219. https://doi.org/10.1108/APJBA-06-2017-0057
   Web of Science ®Google Scholar
• Álvarez-Botas, C., & González-Méndez, V. M. (2019). Corporate debt maturity and economic development. International Journal of Managerial Finance, 15(5), 669–687. https://doi.org/10.1108/IJMF-04-2018-0115
   Web of Science ®Google Scholar
• Anser, R., & Malik, Q. A. (2013). Cash conversion cycle and firms’ profitability–A study of listed manufacturing companies of Pakistan. IOSR Journal of Business and Management, 8(2), 83–87. https://www.iosrjournals.org/iosr-jbm/papers/Vol8-issue2/K0828387.pdf
   Google Scholar
• Bailey, D., & Katz, J. N. (2011). Implementing panel-corrected standard errors in r: the pcse package. Journal of Statistical Software, 42(Code Snippet 1), 1–11. https://doi.org/10.18637/jss.v042.c01
   Google Scholar
• Balakrishnan, K., Blouin, J. L., & Guay, W. R. (2019). Tax aggressiveness and corporate transparency. The Accounting Review, 94(1), 45–69. https://doi.org/10.2308/accr-52130
   Web of Science ®Google Scholar
• Beck, N., & Katz, J. N. (1995). What to do (and not to do) with time-series cross-section data. American Political Science Review, 89(3), 634–647. https://doi.org/10.2307/2082979
   Web of Science ®Google Scholar
• Bona‐Sánchez, C., Pérez‐Alemán, J., & Santana‐Martín, D. J. (2014). Politically connected firms and earnings informativeness in the controlling versus minority shareholders context: European evidence. Corporate Governance: An International Review, 22(4), 330–346. https://doi.org/10.1111/corg.12064
   Web of Science ®Google Scholar
• Boubakri, N., Cosset, J. C., & Saffar, W. (2012). The impact of political connections on firms’ operating performance and financing decisions. Journal of Financial Research, 35(3), 397–423. https://doi.org/10.1111/j.1475-6803.2012.01322.x
   Google Scholar
• Bushman, R., Chen, Q., Engel, E., & Smith, A. (2004). Financial accounting information, organizational complexity and corporate governance systems. Journal of Accounting and Economics, 37(2), 167–201. https://doi.org/10.1016/j.jacceco.2003.09.005
   Web of Science ®Google Scholar
• Chen, D. (2012). Classified boards, the cost of debt, and firm performance. Journal of Banking & Finance, 36(12), 3346–3365. https://doi.org/10.1016/j.jbankfin.2012.07.015
   Web of Science ®Google Scholar
• Chen, S., Chen, X., Cheng, Q., & Shevlin, T. (2010). Are family firms more tax aggressive than non-family firms? Journal of Financial Economics, 95(1), 41–61. https://doi.org/10.1016/j.jfineco.2009.02.003
   Web of Science ®Google Scholar
• Chen, X., Hu, N., Wang, X., & Tang, X. (2014). Tax avoidance and firm value: Evidence from China. Nankai Business Review International, 5(1), 25–42. https://doi.org/10.1108/NBRI-10-2013-0037
   Google Scholar
• Ciftci, I., Tatoglu, E., Wood, G., Demirbag, M., & Zaim, S. (2019). Corporate governance and firm performance in emerging markets: Evidence from Turkey. International Business Review, 28(1), 90–103. https://doi.org/10.1016/j.ibusrev.2018.08.004
   Web of Science ®Google Scholar
• Cook, K. A., Moser, W. J., & Omer, T. C. (2017). Tax avoidance and ex ante cost of capital. Journal of Business Finance & Accounting, 44(7–8), 1109–1136. https://doi.org/10.1111/jbfa.12258
   Web of Science ®Google Scholar
• Dalci, I. (2018). Impact of financial leverage on profitability of listed manufacturing firms in China. Pacific Accounting Review, 30(4), 410–432. https://doi.org/10.1108/PAR-01-2018-0008
   Web of Science ®Google Scholar
• Dawar, V. (2014). Agency theory, capital structure and firm performance: Some Indian evidence. Managerial Finance, 40(12), 1190–1206. https://doi.org/10.1108/MF-10-2013-0275
   Web of Science ®Google Scholar
• Desai, M. A., & Dharmapala, D. (2009). Corporate tax avoidance and firm value. The Review of Economics and Statistics, 91(3), 537–546. https://doi.org/10.3386/w11241
   Web of Science ®Google Scholar
• Desai, R. M., & Olofsgard, A. (2011). The costs of political influence: Firm-level evidence from developing countries. Quarterly Journal of Political Science, 6(2), 137–178. http://dx.doi.org/10.1561/100.00010094
   Web of Science ®Google Scholar
• Drake, M. S., Jennings, J., Roulstone, D. T., & Thornock, J. R. (2017). The comovement of investor attention. Management Science, 63(9), 2847–2867. https://doi.org/10.1287/mnsc.2016.2477
   Web of Science ®Google Scholar
• Dunbar, A., Higgins, D. M., Phillips, J. D., & Plesko, G. A. (2010). What do measures of tax aggressiveness measure? In Proceedings. Annual Conference on Taxation and Minutes of the Annual Meeting of the National Tax Association (Vol. 103, pp. 18–26). National Tax Association. https://www.jstor.org/stable/prancotamamnta.103.18
   Google Scholar
• Dyreng, S. D., Hoopes, J. L., & Wilde, J. H. (2016). Public pressure and corporate tax behavior. Journal of Accounting Research, 54(1), 147–186. https://doi.org/10.1111/1475-679X.12101
   Web of Science ®Google Scholar
• Ebaid, I. E. S. (2009). The impact of capital‐structure choice on firm performance: Empirical evidence from Egypt. The Journal of Risk Finance, 10(5), 477–487. https://doi.org/10.1108/15265940911001385
   Google Scholar
• El-Chaarani, H. (2015). The impact of financial structure on the performance of European Listed Firms. European Research Studies, 17(3), 103–123. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3845066
   Google Scholar
• Faccio, M. (2006). Politically connected firms. American Economic Review, 96(1), 369–386. https://doi.org/10.1257/000282806776157704
   Web of Science ®Google Scholar
• Faccio, M. (2010). Differences between politically connected and nonconnected firms: A cross‐country analysis. Financial Management, 39(3), 905–928 https://doi.org/10.1111/j.1755-053X.2010.01099.x.
   Web of Science ®Google Scholar
• Faccio, M., Masulis, R. W., & McConnell, J. J. (2006). Political connections and corporate bailouts. The Journal of Finance, 61(6), 2597–2635. https://doi.org/10.1111/j.1540-6261.2006.01000.x
   Web of Science ®Google Scholar
• Fama, E. F., & Jensen, M. C. (1983). Separation of ownership and control. The Journal of Law & Economics, 26(2), 301–325. https://www.jstor.org/stable/725104
   Web of Science ®Google Scholar
• Fan, J. P., Wong, T. J., & Zhang, T. (2007). Politically connected CEOs, corporate governance, and Post-IPO performance of China’s newly partially privatized firms. Journal of Financial Economics, 84(2), 330–357. https://doi.org/10.1016/j.jfineco.2006.03.008
   Web of Science ®Google Scholar
• Firmansyah, A., & Febriyanto, A. S. (2018). The effects of tax avoidance, accrual earnings management, real earnings management, and capital intensity on the cost of equity. Jurnal Dinamika Akuntansi, 10(1), 40–50. https://doi.org/10.15294/jda.v10i1.12976
   Google Scholar
• Fisman, R. (2001). Estimating the value of political connections. American Economic Review, 91(4), 1095–1102. https://doi.org/10.1257/aer.91.4.1095
   Web of Science ®Google Scholar
• Flamini, G., Vola, P., Songini, L., & Gnan, L. (2021). The determinants of tax aggressiveness in family firms: An investigation of Italian private family firms. Sustainability, 13(14), 7654. https://doi.org/10.3390/su13147654
   Web of Science ®Google Scholar
• Goh, B. W., Lee, J., Lim, C. Y., & Shevlin, T. (2016). The effect of corporate tax avoidance on the cost of equity. The Accounting Review, 91(6), 1647–1670. https://doi.org/10.2308/accr-51432
   Web of Science ®Google Scholar
• Graham, J. R., Hanlon, M., Shevlin, T., & Shroff, N. (2014). Incentives for tax planning and avoidance: Evidence from the field. The Accounting Review, 89(3), 991–1023. https://dx.doi.org/10.2139/ssrn.2148407
   Web of Science ®Google Scholar
• Guenther, D. A., Matsunaga, S. R., & Williams, B. M. (2017). Is tax avoidance related to firm risk? The Accounting Review, 92(1), 115–136. https://doi.org/10.2308/accr-51408
   Web of Science ®Google Scholar
• Guo, D., Jiang, K., Kim, B. Y., & Xu, C. (2014). Political economy of private firms in China. Journal of Comparative Economics, 42(2), 286–303. https://doi.org/10.1016/j.jce.2014.03.006
   Web of Science ®Google Scholar
• Hanlon, M., & Heitzman, S. (2010). A review of tax research. Journal of Accounting and Economics, 50(2–3), 127–178. https://doi.org/10.1016/j.jacceco.2010.09.002
   Web of Science ®Google Scholar
• Hanlon, M., & Slemrod, J. (2009). What does tax aggressiveness signal? Evidence from stock price reactions to news about tax shelter involvement. Journal of Public Economics, 93(1–2), 126–141. https://doi.org/10.1016/j.jpubeco.2008.09.004
   Web of Science ®Google Scholar
• Hasan, M. B., Ahsan, A. M., Rahaman, M. A., & Alam, M. N. (2014). Influence of capital structure on firm performance: Evidence from Bangladesh. International Journal of Business and Management, 9(5), 184. https://doi.org/10.5539/ijbm.v9n5p184
   Google Scholar
• Hashmi, M. A., Brahmana, R. K., & Lau, E. (2018). Political connections, family firms and earnings quality. Management Research Review, 41(4), 414–432. https://doi.org/10.1108/MRR-05-2017-0136
   Web of Science ®Google Scholar
• Herusetya, A., & Stefani, C. (2020). The Association of Tax Aggressiveness on Accrual and Real Earnings Management. Journal of Accounting and Investment, 21(3), 434–451. https://doi.org/10.18196/jai.2103158
   Google Scholar
• Hillman, A. J., Withers, M. C., & Collins, B. J. (2009). Resource dependence theory: A review. Journal of Management, 35(6), 1404–1427. https://doi.org/10.1177/0149206309343469
   Web of Science ®Google Scholar
• Inger, K. K. (2014). Relative valuation of alternative methods of tax avoidance. The Journal of the American Taxation Association, 36(1), 27–55. https://doi.org/10.2308/atax-50606
   Google Scholar
• Ismail, R. (2016). Impact of liquidity management on profitability of Pakistani firms: A case of KSE-100 Index. International Journal of Innovation and Applied Studies, 14(2), 304–314. https://www.semanticscholar.org/paper/Impact-of-Liquidity-Management-on-Profitability-of-Ismail/7e6ff3ac3c8686f5ef56b9d98031308923889604
   Google Scholar
• Jackowicz, K., Kozłowski, Ł., & Mielcarz, P. (2014). Political connections and operational performance of non-financial firms: New evidence from Poland. Emerging Markets Review, 20, 109–135. https://doi.org/10.1016/j.ememar.2014.06.005
   Web of Science ®Google Scholar
• Jaffar, R., & Abdul-Shukor, Z. (2016). The role of monitoring mechanisms towards company’s performance: Evidence from politically connected companies in Malaysia. Journal of Accounting in Emerging Economies, 6(4), 408–428. https://doi.org/10.1108/JAEE-05-2014-0021
   Google Scholar
• Jensen, M. C. (1986). Agency costs of free cash flow, corporate finance, and takeovers. The American Economic Review, 76(2), 323–329. https://dx.doi.org/10.2139/ssrn.99580
   Web of Science ®Google Scholar
• Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360. https://doi.org/10.1016/0304-405X(76)90026-X
   Web of Science ®Google Scholar
• Khuong, N. V., Liem, N. T., & Minh, M. T. H. (2020). Earnings management and cash holdings: Evidence from energy firms in Vietnam. Journal of International Studies, 13(1), 247–261. https://doi.org/10.14254/2071-8330.2020/13-1/16
   Google Scholar
• Khuong, N. V., Liem, N. T., Thu, P. A., & Khanh, T. H. T. (2020). Does corporate tax avoidance explain firm performance? Evidence from an emerging economy. Cogent Business & Management, 7(1), 1780101. https://doi.org/10.1080/23311975.2020.1780101
   Web of Science ®Google Scholar
• Khurshid, A. (2015). Islamic traditions of modernity: Gender, class, and Islam in a transnational women’s education project. Gender & Society, 29(1), 98–121. https://doi.org/10.1177/0891243214549193
   Web of Science ®Google Scholar
• Khwaja, A. I., & Mian, A. (2005). Do lenders favor politically connected firms? Rent provision in an emerging financial market. The Quarterly Journal of Economics, 120(4), 1371–1411. https://doi.org/10.1162/003355305775097524
   Web of Science ®Google Scholar
• Kmenta, J. (1986). Elements of Econometrics (2nd) ed.). Macmillan. https://doi.org/10.3998/mpub.15701
   Google Scholar
• Kusnadi, Y. (2019). Political connections and the value of cash holdings. Finance Research Letters, 30, 96–102. https://doi.org/10.1016/j.frl.2019.03.035
   Web of Science ®Google Scholar
• Landry, S., Deslandes, M., & Fortin, A. (2013). Tax aggressiveness, corporate social responsibility, and ownership structure. Journal of Accounting, Ethics & Public Policy, 14(3), 611–645. http://dx.doi.org/10.2139/ssrn.2304653
   Google Scholar
• Lanis, R., & Richardson, G. (2012). Corporate social responsibility and tax aggressiveness: An empirical analysis. Journal of Accounting and Public Policy, 31(1), 86–108. https://doi.org/10.1016/j.jaccpubpol.2011.10.006
   Web of Science ®Google Scholar
• Lemmon, M. L., & Lins, K. V. (2003). Ownership structure, corporate governance, and firm value: Evidence from the East Asian financial crisis. The Journal of Finance, 58(4), 1445–1468. https://doi.org/10.1111/1540-6261.00573
   Web of Science ®Google Scholar
• Le, Q. H., & Nguyen, H. N. (2019). The impact of income inequality on economic growth in Vietnam: An empirical analysis. Asian Economic and Financial Review, 9(5), 617–629. https://doi.org/10.18488/journal.aefr.2019.95.617.629
   Google Scholar
• Le, T. P. V., & Phan, T. B. N. (2017). Capital structure and firm performance: Empirical evidence from a small transition country. Research in International Business and Finance, 42, 710–726. https://doi.org/10.1016/j.ribaf.2017.07.012
   Web of Science ®Google Scholar
• Lim, C. Y., Wang, J., & Zeng, C. C. (2018). China’s “mercantilist” government subsidies, the cost of debt and firm performance. Journal of Banking & Finance, 86, 37–52. https://doi.org/10.1016/j.jbankfin.2017.09.004
   Web of Science ®Google Scholar
• Liu, N., Wang, L., & Zhang, M. (2013). Corporate ownership, political connections and M&A: Empirical evidence from China. Asian Economic Papers, 12(3), 41–57. https://doi.org/10.1162/ASEP_a_00236
   Web of Science ®Google Scholar
• Majumdar, S. K., & Chhibber, P. (1999). Capital structure and performance: Evidence from a transition economy on an aspect of corporate governance. Public Choice, 98(3), 287–305. https://doi.org/10.1023/A:1018355127454
   Web of Science ®Google Scholar
• Mardnly, Z., Mouselli, S., & Abdulraouf, R. (2018). Corporate governance and firm performance: An empirical evidence form Syria. International Journal of Islamic and Middle Eastern Finance and Management, 11(4), 591–607. https://doi.org/10.1108/IMEFM-05-2017-0107
   Web of Science ®Google Scholar
• Minh Ha, N., Phuong Trang, T. T., & Vuong, P. M. (2022). Relationship between tax avoidance and institutional ownership over business cost of debt. Cogent Economics & Finance, 10(1), 2026005. https://doi.org/10.1080/23322039.2022.2026005
   Web of Science ®Google Scholar
• Myers, S. C. (1977). Determinants of corporate borrowing. Journal of Financial Economics, 5(2), 147–175. https://doi.org/10.1016/0304-405X(77)90015-0
   Web of Science ®Google Scholar
• Parks, R. W. (1967). Efficient estimation of a system of regression equations when disturbances are both serially and contemporaneously correlated. Journal of the American Statistical Association, 62(318), 500–509. https://doi.org/10.2307/2283977
   Web of Science ®Google Scholar
• Pattiruhu, J. R., & PAAIS, M. (2020). Effect of liquidity, profitability, leverage, and firm size on dividend policy. The Journal of Asian Finance, Economics, and Business, 7(10), 35–42. https://doi.org/10.13106/jafeb.2020.vol7.no10.035
   Web of Science ®Google Scholar
• Porta, R. L., Lopez-de-Silanes, F., Shleifer, A., & Vishny, R. W. (1998). Law and finance. Journal of Political Economy, 106(6), 1113–1155. https://doi.org/10.1086/250042
   Web of Science ®Google Scholar
• Richardson, G., Taylor, G., & Lanis, R. (2013). The impact of board of director oversight characteristics on women on the board of directors and corporate tax aggressiveness. Journal of Accounting and Public Policy, 32(3), 68–88. https://doi.org/10.1016/j.jaccpubpol.2013.02.004
   Web of Science ®Google Scholar
• Richardson, G., Taylor, G., & Lanis, R. (2016). Women on the board of directors and corporate tax aggressiveness in Australia: An empirical analysis. Accounting Research Journal, 29(3), 313–331. https://doi.org/10.1108/ARJ-09-2014-0079
   Web of Science ®Google Scholar
• Salim, M., & Yadav, R. (2012). Capital structure and firm performance: Evidence from Malaysian listed companies. Procedia-Social and Behavioral Sciences, 65, 156–166. https://doi.org/10.1016/j.sbspro.2012.11.105
   Google Scholar
• Sapienza, P. (2004). The effects of government ownership on bank lending. Journal of Financial Economics, 72(2), 357–384. https://doi.org/10.1016/j.jfineco.2002.10.002
   Web of Science ®Google Scholar
• Shaskia, G. (2012). The effects of working capital management on profitability of Dutch listed firms. International Journal of Business Management, 5, 45–60. https://doi.org/10.11648/j.ijefm.20140206.17
   Google Scholar
• Simerly, R. L., & Li, M. (2000). Environmental dynamism, capital structure and performance: A theoretical integration and an empirical test. Strategic Management Journal, 21(1), 31–49. https://doi.org/10.1002/(SICI)1097-0266(200001)21:1<31::AID-SMJ76>3.0.CO;2-T
   Web of Science ®Google Scholar
• Su, Z.-Q., Fung, H.-G., Huang, D.-S., & Shen, C.-H. (2014). Cash dividends, expropriation, and political connections: Evidence from China. International Review of Economics & Finance, 29, 260–272. https://doi.org/10.1016/j.iref.2013.05.017
   Web of Science ®Google Scholar
• Tangngisalu, J., Hasanuddin, R., Hala, Y., Nurlina, N., & Syahrul, S. (2020). Effect of CAR and NPL on ROA: Empirical study in Indonesia Banks. The Journal of Asian Finance, Economics and Business, 7(6), 9–18. https://doi.org/10.13106/jafeb.2020.vol7.no6.009
   Web of Science ®Google Scholar
• Tsuruta, D. (2015a). Bank loan availability and trade credit for small businesses during the financial crisis. The Quarterly Review of Economics and Finance, 55, 40–52. https://doi.org/10.1016/j.qref.2014.09.004
   Web of Science ®Google Scholar
• Tsuruta, D. (2015b). Leverage and firm performance of small businesses: Evidence from Japan. Small Business Economics, 44(2), 385–410. https://doi.org/10.1007/s11187-014-9601-5
   Web of Science ®Google Scholar
• Weill, L. (2008). Leverage and corporate performance: Does institutional environment matter? Small Business Economics, 30(3), 251–265. https://doi.org/10.1007/s11187-006-9045-7
   Web of Science ®Google Scholar
• Yan, J. Z., & Chang, S.-J. (2018). The contingent effects of political strategies on firm performance: A political network perspective. Strategic Management Journal, 39(8), 2152–2177. https://doi.org/10.1002/smj.2908 :
   Web of Science ®Google Scholar
• Yanikkaya, H., Gumus, N., & Pabuccu, Y. U. (2018). How profitability differs between conventional and Islamic banks: A dynamic panel data approach. Pacific-Basin Finance Journal, 48, 99–111. https://doi.org/10.1016/j.pacfin.2018.01.006
   Web of Science ®Google Scholar
• Yazdanfar, D., & Öhman, P. (2015). Debt financing and firm performance: An empirical study based on Swedish data. The Journal of Risk Finance, 16(1), 102–118. https://doi.org/10.1108/JRF-06-2014-0085
   Web of Science ®Google Scholar
• Zhang, H., Wang, M., & Jiang, J. (2017). Investor protection and stock crash risk. Pacific-Basin Finance Journal, 43, 256–266. https://doi.org/10.1016/j.pacfin.2017.05.001
   Web of Science ®Google Scholar
• Zhao, X., Wan, D., & Xu, H. (2013). Political connections and the efficiency of capital allocation through bond financing in Chinese listed companies. Emerging Markets Finance and Trade, 49(sup2), 158–170. https://doi.org/10.2753/REE1540-496X4902S209
   Web of Science ®Google Scholar