The Relationship Between Managerial Ownership And Tax Avoidance
Abstract
This study examines the association between managerial ownership and corporate tax
avoidance among publicly-listed companies in Vietnam. The sample data includes 242 listed
companies on Ho Chi Minh Stock Exchange after the screening step to exclude financial
institutions and companies with missing data. The research aims to answer the research
question that whether the relationship between managerial ownership and tax avoidance exists
in Vietnamese companies, focusing on the five-year period of 2015-2019. The research model
is developed by employing effective tax rate as a dependent variable, which is the proxy
measure for the tax avoidance, and the independent variable as the percentage of managerial
ownership and three control variables (i.e. return on assets, leverage and company size). The
data analysis procedures are performed mostly on STATA software with the sample data
downloaded from the Thomson Reuters Eikon database and other available sources of
information such as Vietstock Finance or companies’ websites. After the testing process, the
Generalized Least Squared is chosen to be the most appropriate model for this study as it
overcomes the phenomenon of autocorrelation and heteroskedasticity. The regression results
of this study show that managerial ownership has no significant impact on the effective tax
rate, meaning that the relationship between managerial ownership and corporate tax avoidance
does not significantly exist in Vietnamese companies. This study also found out the significant
and negative relationship between tax avoidance and other control variables such as return on
assets, leverage and company size.