Corporate governance tax avoidance and financial constraints

How does corporate governance affect financial performance?
By establishing appropriate incentives and controls, corporate governance can help reduce conflicts of interest and improve the company's financial performance by increasing the value of the company and the return on investment for shareholders..
What is financial governance?
What is financial governance? Financial governance refers to the way a company collects, manages, monitors and controls financial information.
Financial governance includes how companies track financial transactions, manage performance and control data, compliance, operations, and disclosures..
What is the difference between tax planning tax avoidance and tax evasion?
In summary, tax planning is a legitimate and encouraged practice to optimize tax liabilities, tax evasion is illegal and involves fraudulent actions, and tax avoidance is the legal exploitation of tax laws to minimize taxes, often raising ethical questions depending on the extent and methods used..
Corporate Governance is needed to create a corporate culture of consciousness, transparency and openness.
It enables a company to maximise the long term value of the company which is seen in terms of performance of the company.
Corporate governance is the set of rules and practices a company employs to direct its decisions and actions.
Since these rules dictate how a company reaches its decisions, corporate governance processes have a significant impact on a company's performance.
People utilize various methods to avoid paying taxes, including filing fraudulent tax returns, smuggling, falsifying documents, and bribery.
Tax evasion is important because it is considered illegal in India and leads to severe penalties.

Conditional on having poor governance, tax avoidance is associated with greater financial constraints and a greater likelihood of financial distress. In firms with strong governance, however, we find that tax avoidance does not have a negative impact on financial constraints.

financial constraints. Our results suggest that tax avoidance is a less useful source of financing for constrained firms when they are plagued with potential agency problems and opaque information environments. Stronger governance mechanisms can help firms mitigate the negative consequences of tax avoidance.

Does corporate governance affect the relationship between corporate tax avoidance and financial constraints?

We examine how corporate governance affects the relationship between corporate tax avoidance and financial constraints

Conditional on having poor governance, tax avoidance is associated with greater financial constraints and a greater likelihood of financial distress

Is tax avoidance a useful source of financing for constrained firms?

Our results suggest that tax avoidance is a less useful source of financing for constrained firms when they are plagued with potential agency problems and opaque information environments

Stronger governance mechanisms can help firms mitigate the negative consequences of tax avoidance

Is tax planning associated with financial constraints?

Contrarily, recent studies by Bayar, Huseynov, and Sardarli (2018) document that tax planning is associated with greater financial constraints when firms are plagued with principal-agency problems

Conditional on having poor governance, tax avoidance is associated with greater financial constraints and a greater likelihood of financial distress. In firms with strong governance, however, we find that tax avoidance does not have a negative impact on financial constraints.

Corporate governance tax avoidance and financial constraints

How does corporate governance affect financial performance?

What is financial governance?

What is the difference between tax planning tax avoidance and tax evasion?

Does corporate governance affect the relationship between corporate tax avoidance and financial constraints?

Is tax avoidance a useful source of financing for constrained firms?

Is tax planning associated with financial constraints?