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    Does a Firm’s Life Cycle Explain Its Propensity to Engage in Corporate Tax Avoidance?

    241810.pdf (728.8Kb)
    Access Status
    Open access
    Authors
    Hasan, Mostafa
    Al-Hadi, A.
    Taylor, G.
    Richardson, G.
    Date
    2016
    Type
    Journal Article
    
    Metadata
    Show full item record
    Citation
    Hasan, M. and Al-Hadi, A. and Taylor, G. and Richardson, G. 2016. Does a Firm’s Life Cycle Explain Its Propensity to Engage in Corporate Tax Avoidance? European Accounting Review. 26 (3): pp. 469-501.
    Source Title
    European Accounting Review
    DOI
    10.1080/09638180.2016.1194220
    ISSN
    0963-8180
    School
    Department of Finance and Banking
    Remarks

    This is an Author's Original Manuscript of an article published by Taylor & Francis in European Accounting Review on 23/06/2016 available online at http://www.tandfonline.com/10.1080/09638180.2016.1194220

    URI
    http://hdl.handle.net/20.500.11937/3612
    Collection
    • Curtin Research Publications
    Abstract

    This study examines whether a firm’s life cycle explains its propensity to engage in corporate tax avoidance. Based on the Dickinson (2011) model of firm life cycle stages and a large dataset of US publicly listed firms over the 1987–2013 period, we find that tax avoidance is significantly positively associated with the introduction and decline stages and significantly negatively associated with the growth and mature stages using the shake-out stage as a benchmark. We observe a U-shaped pattern in tax avoidance outcomes across the various life cycle stages in line with the predictions of dynamic resource-based theory. Our findings are consistent using several robustness checks. Overall, our results show that a firm’s life cycle stage is a significant determinant of tax avoidance.

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