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Determinants of effective corporate tax rate. Empirical evidence from listed companies in Eastern European Stock Exchanges

Author

Listed:
  • Georgeta VINTILĂ

    (Bucharest University of Economic Studies, Romania)

  • Radu Alin PĂUNESCU

    (Bucharest University of Economic Studies, Romania)

  • Ştefan Cristian GHERGHINA

    (Bucharest University of Economic Studies, Romania)

Abstract

The aim of the paper is to examine the determinants of effective corporate tax rate for three listed companies from Eastern European Stock Exchanges - Bulgaria, Hungary, and Romania, for the period 2006-2015. Using multivariate regressions and different estimation methods (data panels with OLS EGLS and quantile regressions) we studied the link between the effective corporate tax rate and profitability (ROA and ROE), indebtedness (long-term debt, debt-on-equity) and firm-level control variables (firm size and year-to-year asset variation). Empirical results supported the idea that for Romania, Bulgaria and Hungary managers are focused on the financial management, especially on profitability, and less focused on fiscal management, in part, due to the lower taxation. The negative link between profitability and the effective corporate tax rate implies the idea that a profitable company is implicitly able to lower its effective tax rate without using tax avoidance.

Suggested Citation

  • Georgeta VINTILĂ & Radu Alin PĂUNESCU & Ştefan Cristian GHERGHINA, 2017. "Determinants of effective corporate tax rate. Empirical evidence from listed companies in Eastern European Stock Exchanges," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(Special), pages 37-46.
  • Handle: RePEc:agr:journl:v:xxiv:y:2017:i:special:p:37-46
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    References listed on IDEAS

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