Tax Avoidance
Proxy: Cash Effective Tax Rate (CETR)
Definition & Description
Tax Avoidance is a legal tax management strategy to minimize the tax burden paid by the company. The commonly used metric is the Cash Effective Tax Rate (CETR), which measures the portion of actual cash taxes paid from pre-tax income.
How to Use (Panel Data)
Used in tax and governance research to examine tax aggressiveness, its effect on firm value, or its relationship with political connections.
Full Explanation Article
A low CETR (well below the statutory corporate tax rate) indicates a high level of tax avoidance.
Researchers also use Book-Tax Differences (BTD) to observe the gap between accounting income and taxable income.
Related Reference Journals
- [1]Chen, S., Chen, X., Cheng, Q., & Shevlin, T. (2010). Are family firms more tax aggressive than non-family firms?
- [2]Dyreng, S. D., Hanlon, M., & Maydew, E. L. (2008). Long-run corporate tax avoidance.
Research Ideas
The effect of political connections and managerial ownership on tax avoidance.
Does CSR moderate the impact of tax avoidance on firm value?
Frequently Asked Questions (FAQ)
What is the difference between this proxy and regular accounting variables?
For detailed information about this proxy, please refer to the article above. NgepetData can automatically extract the required data from your PDF Annual Report.
Where does the data come from to calculate this proxy?
For detailed information about this proxy, please refer to the article above. NgepetData can automatically extract the required data from your PDF Annual Report.
Can this proxy be used for all industry sectors?
For detailed information about this proxy, please refer to the article above. NgepetData can automatically extract the required data from your PDF Annual Report.
What is the difference between tax avoidance and tax evasion?
For detailed information about this proxy, please refer to the article above. NgepetData can automatically extract the required data from your PDF Annual Report.