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- 2019 (4) (entfernen)
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- Compensation (1)
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- Institut für Management, Accounting & Finance (IMAF) (4) (entfernen)
This cumulative dissertation deals with the association between corporate governance, corporate finance and corporate tax avoidance in four scientific articles. The aim of this dissertation is to explain corporate tax avoidance by (a) focusing on corporate governance institutions as determinants of tax avoidance and (b) focusing on financial consequences of tax avoidance. Due to the close association between corporate governance and the concept of corporate social responsibility (CSR), the relationship between CSR and tax avoidance is also addressed. The first article using structured literature review methodology, analyzes extant research on the association between corporate governance and tax avoidance based on stakeholder-agency theory. However, also classical principal-agent theory is taken into account as its classical foundation. The first article identifies a number of open research questions and thereby serves as a theoretical basis for the subsequent articles. The second article also using structured literature review methodology, analyzes extant research on the association between CSR and tax avoidance. This article is also based on stakeholder-agency theory and identifies open research questions. The third article based on results of the first article, investigates tax avoidance by German private family firms as a specific variant of corporate governance, using an empirical quantitative approach. The article finds that (a) German private family firms avoid more tax than non-family firms, that (b) tax avoidance is positively associated with the capital stake of the family and that (c) tax avoidance is positively associated with the number of shareholders in both family and non-family firms. Results reinforce that corporate tax avoidance is associated to conflicts among the shareholders of private firms. The fourth article investigates the cost of debt of German public firms as a function of tax avoidance and tax risk. The article finds that (a) tax avoidance is negatively associated to the cost of debt, that (b) tax risk is positively associated to the cost of debt and that (c) the association between tax avoidance and the cost of debt becomes negative when a high level of tax risk is present.
On 25 October 2016, the European Commission presented a proposal for a directive on a Common Corporate Tax Base (CCTB Proposal), which contains a comprehensive concept for the harmonisation of profit calculation regulations within the EU. Against this current background, the objective of the present work is to contribute to the implementation of the CCTB by identifying ambiguities and conceptual weaknesses in the design of the profit determination system of the CCTB Proposal and developing concrete recommendations for action for adjustments in the course of the further legislative procedure. In the first article, selected profit calculation rules of the CCTB Proposal will be analysed in detail and compared with the provisions on profit calculation under German commercial and tax law and the International Financial Reporting Standards (IFRS) recognised across member states. Based on the legal comparison, questions of interpretation and inadequacies of the profit calculation system will be considered and proposals for adjustments to various regulatory areas will be submitted. Furthermore, in the second article, within the framework of a holistic study, expert interviews will be used as an empirical-qualitative research design to generate reliable assessments on the part of the various stakeholder groups affected by the implementation of the future directive or involved in its elaboration. The results show the extent to which the profit determination rules of the CCTB Proposal in their current form are suitable for national and EU-wide implementation and in which areas the various expert groups still see concrete need for adaptation. Based on these expert assessments, the third article finally develops a proposal to reduce the threat of legal uncertainty in interpretation issues criticised by the experts. Based on economic maxims developed by the European Commission and existing accounting principles of the current CCTB Proposal, the EU Accounting Directive and IFRS, a system of specific European tax principles will be developed which could be implemented within the framework of the CCTB Proposal.
Essays on Say-on-Pay: theoretical analysis, literature review and empirical evidence from Germany
(2019)
The dissertation contains four journal articles together with a framework manuscript. The overall subject is the so-called Say-on-Pay (SOP) vote. SOP is a law that enables shareholders to vote on the appropriateness of executive compensation during the firms’ annual general meeting. The dissertation investigates SOP votes from different angles. While the framework provides a background for the relevance of the work, outlines existing research gaps, covers an in-depth discussion and concludes relevant research questions, the four articles present the essence of the dissertation. The first article is a theoretical paper on the recent advances of behavioural agency theory. It serves as a theoretical foundation for the empirical work of the dissertation. Although principal-agent theory has gained a prominent place in research, its negative image of self-serving managers is frequently criticized. Consequently, scholars advocate the utilization of positive management theories, such as stewardship theory. This paper reviews the literature of both theoretical concepts and describes how behavioural characteristics allow for a mutually beneficial symbiosis of the two theories. The second article establishes the foundation of the scholarly knowledge in the field by systematically reviewing the empirical literature. The review covers 71 empirical articles published between January 1995 and September 2017. The studies are reviewed within an empirical research framework that separates the reasons for shareholder activism and SOP voting dissent as input factor on the one hand and the consequences of shareholder pressure as output factor on the other. The implications are analysed, and new directions for further research are discussed by proposing 19 different research questions. Building on the research gaps defined in the literature review, the third article is an empirical manuscript. In this paper, a hand-selected sample of 1,676 annual general meetings with 268 management-sponsored SOP votes in 164 different companies between 2010 and 2015 in Germany is analysed. The analysis focused on the structure, rather than the level, of executive compensation by applying a sample-selection model and panel data regression. Finally, the fourth paper investigates the rare setting of voluntary SOP votes. Using 1,841 annual general meetings of listed firms in Germany between 2010 and 2016, the effects of financial and non-financial (sustainable) performance on SOP voting likelihood and voting results are tested.
This paper-based dissertation deals with capital structures and tax policies of German family businesses. Family firms as the predominant company form in Germany are mainly characterized by the overlapping of the two spheres family and business, both having different goal systems and preferences. This also has an impact on decision making with regard to corporate finance including the application of tax avoidance policies. In Germany, bank finance is the dominant financing source for family firms but there is a preference for internal finance since it comes along with more external independency. Extant research usually bases its results on samples of publicly listed companies. These studies come up with different results regarding family firms' actual financing preferences and capture their heterogeneity only to a very little extent. In this light, the present dissertation and its three papers examine different research questions in the context of capital structure decisions and tax avoidance in family firms. All the three papers apply a quantitative empirical research design. The first paper is a comparison between capital structures of family firms and non-family firms. The paper examines differences in bank debt and trade credit ratios. Overall, the findings show that family firms have significantly higher overall and long-term debt levels compared to their non-family counterparts. The identity as a family firm, which leads to a leap of faith by banks, can be a possible explanation for these results. The second paper is an in-depth examination of drivers of bank debt levels within the group of family firms. Further, it addresses heterogeneity amongst family firms and combines survey results and corresponding financial information. This represents a first attempt to capture family firm heterogeneity and its link to financial issues. The study shows that the more power in the company is exerted via management or supervisory board by the family, the less bank debt is used. Paper three is an extension of the previous two studies as it sheds light on tax avoidance, a significant instrument to strengthen the internal financing capability of a firm. This also takes up a research gap as there is very little research on taxation in family firms. Contrary to the expectation, the study reveals that private family firms might pay less tax than their non-family peers.