Corporate tax avoidance: a systematic literature review and future research directions

Abstract

Purpose – The increased interest among academicians to explore more about tax management behavior is evident in the literature on corporate tax avoidance. This paper aims to illustrate the multiple aspects that influence the tax avoidance behavior of corporations and its impacts through the systematic review method. Design/methodology/approach – This study used “Tax Avoidance” OR “Tax Aggressiveness” OR “Tax Planning” as search strings to extract the relevant literature from the Scopus database. This study is a comprehensive analysis of existing literature on corporate tax avoidance behavior. Further, the keyword network analysis has been used to find out the most explored and dry research areas related to corporate tax avoidance behavior using VOSviewer software. Findings – The study finds that taxation decision is an important managerial decision. Managers adopt tax avoidance tactics to boost postax profits to meet the shareholders’ expectations, particularly of risk-averse shareholders, and sometimes for their benefit also. With this, this study also finds that firms’ characteristics, political connections and corporate social responsibility activities also impact taxation decisions. In addition, the study identifies that tax-avoiding behavior has a contradictory impact on firm value, market growth and corporate transparency disclosure decisions. Research limitations/implications – The study assists the researchers by providing a brief overview of tax avoidance behavior, for corporates in understanding the implications of tax avoidance, and for policymakers to fix the taxation loopholes and bring necessary tax reforms. Originality/value – This study adds to the existing literature by providing a thorough overview of theories, determinants and outcomes of corporate tax avoidance behavior.

Keywords

• Tax avoidance
• Tax management
• Tax planning
• Scopus
• VOSviewer