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Tax aggressiveness under concentrated ownership: The importance of long-term institutional investors

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  • Kałdoński, Michał
  • Jewartowski, Tomasz

Abstract

Using a sample of 1,707 firm-year observations for the period 2010–2019 based on the Warsaw Stock Exchange, we reveal the positive relation between corporate tax aggressiveness and long-term institutional ownership. Controlling for a “normal level” of tax avoidance within the industry and firm size we provide evidence that tax aggressiveness increases with the increase of shareholdings of independent long-term institutional investors, domestic long-term institutional investors, and long-term institutional investors holding relatively large stakes. This relation holds for firms prone to severe agency problems, such as family firms. Our results thus suggest that ownership structure affects corporate tax avoidance, in line with the agency perspective of corporate tax aggressiveness.

Suggested Citation

  • Kałdoński, Michał & Jewartowski, Tomasz, 2024. "Tax aggressiveness under concentrated ownership: The importance of long-term institutional investors," Finance Research Letters, Elsevier, vol. 65(C).
    • Handle: RePEc:eee:finlet:v:65:y:2024:i:c:s1544612324005713
    DOI: 10.1016/j.frl.2024.105541
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    More about this item

    Keywords

    Institutional investors; Institutional ownership; Corporate tax aggressiveness;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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