LEVEL OF TAXATION, FISCAL LITIGATION, AND REPUTATION OF BRAZILIAN PUBLICLY TRADED COMPANIES
Article Sidebar
Main Article Content
Abstract
Corporate reputation is an important tool to help organizations achieve their goals, as well as the reduction of taxes (tax avoidance). However, an aggressive reduction in taxes can lead to tax disputes, which may or may not negatively affect corporate reputation, thus characterizing controversial strategies. Although the literature offers studies that evaluate the relationship between taxation levels and variables such as governance, crisis, sustainability, among others, there is a scarcity of research linking profit taxation levels and corporate reputation associated with tax litigation processes. This study employs a quantitative approach, with data collected from the Economática® database and the Administrative Tax Appeals Board (CARF) website. Logistic regression analysis is conducted to assess the relationship between the presence of tax litigation, taxation levels, and the reputation of publicly traded companies listed on the B3. The dependent variables include reputation indicators such as the Corporate Sustainability Index (ISE) and the ranking of the Biggest and Best (MM) companies. The results indicate that the presence of tax litigation does not reduce the likelihood of having a strong reputation, whereas a low level of taxation does. The interaction between litigation and low taxation, in turn, does not decrease the probability of a company having a strong reputation. It is concluded that while a low level of taxation negatively affects a company's reputation, the combination with tax litigation processes does not exacerbate this perception. This finding reinforces the idea that stakeholders perceive tax strategies differently depending on the context.
Article Details
This work is licensed under a Creative Commons Attribution 4.0 International License.
Copyright (c). Conjuncture Bulletin (BOCA)
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
ADAMS, C.; FREEDMAN, R. “Environmental Risks and Corporate Reputation: A Sectoral Analysis”. Socio-Economic Review, vol. 21, 2023.
AGGARWAL, R. et al. “The role of governance in mitigating reputational risk”. Journal of Corporate Finance, vol. 74, 2022.
ARCÍA-LÓPEZ, R. et al. “La relación entre litigios fiscales y reputación corporativa: Un análisis en América Latina”. Revista Latinoamericana de Economía y Finanzas, vol. 34, n. 2, 2022.
BAE, J. et al. “Ownership structure and firm performance: The moderating role of governance”. Corporate Governance: An International Review, vol. 31, 2023.
BANKMAN, J. “Tax litigation and corporate reputation: A review”. Journal of Corporate Taxation, vol. 45, 2021.
BANKMAN, J. “The tax shelter battle”. The Crisis in Tax Administration, vol. 9, 2004.
CABELLO, O. G.; PEREIRA, C. A. “Práticas De Tributação Do Lucro Na Effective Tax Rate (ETR): Uma Abordagem Da Teoria Das Escolhas Contábeis”. Anais do Associação Nacional de Programas de Pós-Graduação em Ciências Contábeis. Rio de Janeiro: ANPCONT, 2014.
CHATTERJEE, S.; PRICE, B. “The Reputational Costs of Corporate Litigation: Long-Term Media Reputation Damages to Firms’ Involvement in Litigation”. Corporate Reputation Review, vol. 24, 2022.
CHATTERJEE, S.; PRICE, R. “The role of media coverage in corporate tax litigation and reputational risk”. Journal of Business Ethics, vol. 169, 2022.
CHEN, J. et al. “Tax avoidance, corporate transparency, and firm value: Evidence from international firms”. Journal of Financial Economics, vol. 141, 2021.
CHEN, J. Z. et al. “Information processing costs and corporate tax avoidance: evidence from the SEC’s XBRL mandate”. Journal of Accounting and Public Policy, vol. 40, 2021.
CHUN, R. et al. “Corporate reputation: being good and looking good”. Business and Society, vol. 58, n. 6, 2019.
DAVIS, R. et al. “The evolving nature of tax avoidance in emerging markets”. Journal of International Accounting Research, vol. 19, n. 2, 2022.
DEMERÉ, P. et al. “The economic effects of special purpose entities on corporate tax avoidance”. Contemporary Accounting Research, vol. 37, n. 4, 2020.
DEMERÉ, W. et al. “Corporate social responsibility, tax avoidance, and reputation risk”. Journal of Corporate Finance, vol. 67, 2020.
DONELSON, D. C. et al. “Is tax aggressiveness associated with tax litigation risk? Evidence from D&O insurance”. Review of Accounting Studies, vol. 27, 2021.
FAN, J. P. H.; WONG, T. J. “Corporate Ownership Structure and Its Implications on Corporate Reputation and Performance”. Journal of Financial Studies, vol. 34, 2023.
FERRERA, L. et al. “The evolving public perception of corporate tax avoidance: Transparency and reputational risks”. Global Journal of Accounting and Finance, vol. 15, n. 1, 2021.
FISHER, J. M. “The Role of Tax Transparency Reporting in Corporate Governance and CSR”. Springer [2023]. Disponível em: . Acesso em: 23/04/2024.
FOMBRUN, C.; SHANLEY, M. “What’s in a name. Reputation building and corporate strategy”. Academy of Management Journal, vol. 33, 1990.
FOMBRUN, C; VAN RIEL, C. B. M. “The reputational landscape”. Corporate Reputation Review, vol. 1, n. 1, 1997.
FRANÇA, R. D. Ensaios sobre tax avoidance, reputação corporativa e governança no Brasil (Dissertação de Mestrado em ciências contábeis). João Pessoa: UFPB, 2018.
FRANÇA, R. D. et al. “Influência da restrição financeira e da crise 93financeira global na Effective Tax Rate de empresas latino-americanas”. Universia, vol 12, n 1, 2017.
GARCÍA-LÓPEZ, R. et al. “La relación entre litigios fiscales y reputación corporativa: Un análisis en América Latina”. Revista Latinoamericana de Economía y Finanzas, vol. 34, n. 2, 2022.
GJØLBERG, M. “The origin of corporate social responsibility: Global forces or national legacies?” Socio-Economic Review, vol. 20, 2022.
GOMES, A. P. M. “O impacto da complexidade tributária e dos parcelamentos especiais na tomada de decisão da (des) obediência tributária das empresas brasileiras listadas na B3: um estudo sob a ótica da teoria dos jogos”. Revista Mineira de Contabilidade, vol. 22, n. 32020.
GRAHAM, J. R.; RAEDY, J. S.; SHACKELFORD, D. A. “Research in accounting for income taxes”. Journal of Accounting and Economics, vol. 73, 2022.
HANLON, M.; HEITZMAN, S. “A review of tax research”. Journal of Accounting and Economics, vol. 50, 2010.
HANLON, M.; HEITZMAN, S. “Corporate governance and tax transparency: Implications for shareholders”. Journal of Business Research, vol. 78, 2023.
HEALY, P. M.; WAHLEN, J. M. “A review of the earnings management literature and its implications for standard setting”. Accounting Horizons, vol. 36, 2022.
JAIN, T.; JAMALI, D. “Sustainability and corporate governance: A systematic review and future directions”. Journal of Business Ethics, vol. 178, 2022.
JANSSEN, B. “Corporate effective tax rates in the Netherlands”. De Economist, vol. 153, n. 1, 2005.
JOHANSEN, T. R.; JØRGENSEN, P. E. “The economic sector's influence on corporate reputation: A comparative analysis”. European Accounting Review, vol. 30, n. 2, 2021.
JONES, T.M.; WICKS, A.C. “Corporate reputation and firm value: Evidence from global markets”. Journal of Management Studies, vol. 59, 2022.
KHAN, J.; et al. “Corporate governance and ownership structure: Implications for reputation”. International Review of Financial Analysis, vol. 82, 2023.
KIM, J. et al. “Does corporate debt shape reputation? Insights from international markets. International”. Review of Financial Analysis, vol. 82, 2022.
KIM, J. et al. “The impact of corporate debt on reputation”. Journal of Corporate Finance, vol. 82, 2023.
KPMG. Organizations prepare for a new era of tax risks as scrutiny intensifies. London: KPMG Report, 2023.
KRÜGER, S. et al. “Tax harmonization challenges within the European Union: The role of legal uncertainty in multinational taxation”. European Taxation Journal, vol. 37, n. 4, 2021.
LA PORTA, R. et al. “Corporate ownership structures: An international perspective”. Review of Financial Studies, vol. 33, n. 5, 2020.
LECLERC, P.; DURAND, A. “La complexité fiscale en France et son impact sur les entreprises: Une analyse comparative avec le Brésil”. Revue Française de Finances Publiques, vol. 23, n. 2, 2022.
LECLERCQ, J.; DEMOULIN, F. “La réputation corporative et la gestion des litiges fiscaux en France”. Revue Française de Comptabilité, vol. 124, n. 3, 2021.
LOPES, S.; RIBEIRO, M. “Corporate taxation and financial strategies: An empirical analysis of tax avoidance practices”. Journal of Financial Studies, vol. 68, n. 3, 2022.
LOPEZ, M. et al. “Activism and corporate tax strategies: How social movements are reshaping corporate governance”. Journal of International Taxation, vol. 34, n. 3, 2022.
LÓPEZ, M.; MARTINEZ, J. “Corporate governance and tax transparency: Evidence from multinational firms”. International Journal of Accounting Studies, vol. 29, n. 1, 2023.
LOZANO, R. et al. “Reputational risk and corporate social responsibility: The role of governance and leadership”. Sustainable Development, vol. 30, 2022.
LUNGU, C. et al. “The Association between Audit Quality and Corporate Tax Avoidance: A Bibliometric Review and Early Evidence on the European Union”. Journal of Risk and Financial Management, vol. 16, n. 8, 2023.
MARCHESI, F.; ZONATELI, L. “Avaliação das práticas de elisão fiscal: Uma análise das empresas brasileiras listadas na B3”. Revista Brasileira de Economia e Contabilidade, vol. 22, n. 2, 2020.
MARTINEZ, A. L; RAMALHO, V. P. “Agressividade tributária e sustentabilidade empresarial no Brasil”. Revista Catarinense da Ciência Contábil, vol. 16, 2017.
MARTÍNEZ, J.; RODRIGUEZ, A. “Reputación corporativa y transparencia fiscal: Un estudio empírico en España”. Cuadernos de Economía y Dirección de la Empresa, vol. 33, n. 1, 2021.
MORALES, L. et al. “Litigios fiscales y reputación: El caso de las empresas mexicanas”. Revista Mexicana de Estudios Fiscales, v. 19, n. 2, 2022.
MORCK, R. et al. “Agency problems and ownership structures: A comprehensive review”. Journal of Finance, vol. 76, n. 1, 2021.
MORCK, R. et al. “Ownership structure and political connections: A review”. Journal of Finance, vol. 76, n. 3, 2021.
MURRAY, A. “Inflated profits in corporate books is half the story”. The Wall Street Journal, vol. 2, 2002.
NARAYAN, R. et al. “Cultural influences on corporate tax strategies: A cross-country analysis”. Journal of Business Ethics, vol. 170, n. 3, 2021.
NARAYAN, R.; KUMAR, P. “Tax litigation and corporate behavior in emerging markets: Evidence from India and Brazil”. International Journal of Taxation Studies, vol. 22, n. 1, 2022.
NORTON ROSE FULBRIGHT. “Annual Litigation Trends Survey“. Norton Rose Fulbright [2023]. Disponível em: . Acesso em: 04/05/2024.
PLETSCH, C. S. et al. “Reputação corporativa e desempenho econômico-financeiro das 100 maiores empresas listadas na BM&FBovespa”. Revista Pretexto, vol. 21, 2020.
ROBERTS, M.; ANDERSON, L.; SMITH, P. “Rethinking tax metrics: Moving beyond ETR in tax planning research”. Accounting Review, vol. 98, n. 1, 2023.
SCHMIDT, H. et al. “Litigation risk and tax planning: The effects of prolonged tax disputes on corporate strategies”. Review of Public Economics, vol. 55, n. 2, 2021.
SCHMIDT, K. et al. “Corporate governance and tax transparency: Implications for reputation management in global firms”. Journal of Corporate Finance, vol. 69, 2021.
SCHNEIDER, F. et al. “Legal uncertainty and foreign direct investment: The case of Brazil’s tax litigation system”. Journal of Economic Perspectives, vol. 35, n. 1, 2023.
SCHULER, D.; AUPPERLE, K.; WEBER, M. “Corporate Governance and Its Impact on Stakeholder Trust”. Journal of Business Ethics, vol. 178, 2022.
SCHWARZ, D. et al. “Media scrutiny and tax litigation: How public coverage shapes corporate reputations”. Journal of International Taxation, vol. 28, n. 5, 2022.
SCHWARZ, H. et al. “Reputationsmanagement und Steuertransparenz in deutschen Unternehmen”. Zeitschrift für Betriebswirtschaft, vol. 93, n. 3, 2022.
SIMONE, L. et al. “How reliably do empirical tests identify tax avoidance?” Contemporary Accounting Research, 2020.
SIMONE, L.; LESTER, R.; SEIDMAN, J. “Corporate Tax Avoidance and Firm Value: Evidence from International Firms”. Journal of Accounting and Economics, vol. 95, 2023.
SMITA, M. “Logistic regression model – A review”. International Journal of Innovative Science and Research Technology, vol. 6, n. 5, 2021.
TAYLOR, G.; RICHARDSON, G. “The Influence of Corporate Tax Planning on Firm Reputation”. Journal of Corporate Finance, vol. 81, 2023.
WALKER, K. “A systematic review of the corporate reputation literature: Definition, measurement, and theory”. Corporate Reputation Review, vol. 12, n. 4, 2010
WANG, J. et al. “Corporate debt, growth, and reputation: A comparative study”. Finance Research Letters, vol. 44, 2021.
WATSON, J. et al. “Tax strategies, corporate reputation, and public perception: A new perspective on tax avoidance”. Journal of Corporate Finance, vol. 70, n. 3, 2022.
WEIGELT, K.; CAMERER, C. “Reputation and corporate strategy: A review of recent theory and applications”. Strategic Management Journal, vol. 9, n. 5, 1988.
WINKLER, T. et al. “The impact of aggressive tax practices on corporate reputation in the financial sector”. Zeitschrift für Finanzwirtschaft, vol. 78, 2023.
WU, C. et al. “Corporate size, transparency, and the evolving role of tax avoidance in reputation management”. Review of Accounting Studies, vol. 26, n. 4, 2021.
ZHANG, Y. et al. “Ownership structure and reputation: The role of minority shareholder protection”. Journal of Business Research, vol. 126, 2022.
ZHOU, J. et al. “The interaction between corporate governance and reputation risk”. Journal of Corporate Finance, vol. 92, 2023.
ZIMMERMAN, J. “Taxes and firm size”. Journal of Accounting and Economics, vol. 5, 1983.