Research of Corporate Tax Impact on Financial Performance. Case of Companies Listed on Bucharest Stock Exchange

Abstract

Financial performance is the objective of any economic entity, regardless the domain it activates in. From the decision-making process perspective, the corporate tax is included in the equation of financial performance, considering that it has multiple informational facets at the company’s level. Considering the computation formula for the due tax as a premise, one can say that along with the economic development of the company, there is a positive correlation degree between it and the fiscal liability, determined by the multiplication of the number of transactions generating tax. Therefore, the corporate tax becomes relevant information for decision making in terms of organization form, reinvestment and others. In this context, our research plans to identify a relation between corporate tax and the financial performance of an entity. In this respect, two econometric models were built showing that the effective tax rate passes the tests of significance and influences the performance indicators in a negative way.

Keywords

• corporate tax
• net profit
• econometric model
• financial performance
• financial position
• Romania