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Determinants of tax avoidance – evidence on profit tax-paying companies in Romania

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  • Mihaela Mocanu
  • Sergiu-Bogdan Constantin
  • Vasile Răileanu

Abstract

Our objective is to investigate the determinants of tax avoidance in Romanian companies in 2013–2017. Our initial sample comprises 236 privately owned companies that are payers of profit tax and have been found guilty of tax evasion. This was matched with 236 ‘compliant’ companies structured similarly by industry, whereas the final sample comprises 1674-year-observations. We defined ‘compliant’ those companies that have never been prosecuted for tax evasion. Our main finding is that larger companies with lower financial performance and lower leverage ratio are more inclined towards tax avoidance. The geographical region and the industry sector in which companies operate in are also determining their tax avoidant-behaviour. Surprisingly, the fiscal regulations amended starting with 2016 did not lead to an apparent exacerbation of tax avoidance among profit tax payers.

Suggested Citation

  • Mihaela Mocanu & Sergiu-Bogdan Constantin & Vasile Răileanu, 2021. "Determinants of tax avoidance – evidence on profit tax-paying companies in Romania," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 34(1), pages 2013-2033, January.
    • Handle: RePEc:taf:reroxx:v:34:y:2021:i:1:p:2013-2033
    DOI: 10.1080/1331677X.2020.1860794
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    Cited by:

    1. Francisco J. Delgado & Elena Fernández-Rodríguez & Roberto García-Fernández & Manuel Landajo & Antonio Martínez-Arias, 2023. "Tax avoidance and earnings management: a neural network approach for the largest European economies," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 9(1), pages 1-25, December.
    2. Alfred James Kimea & Msizi Mkhize & Haruna Maama, 2023. "Firm-specific Determinants of Aggressive Tax Management among East African Firms," International Journal of Economics and Financial Issues, Econjournals, vol. 13(3), pages 100-108, May.

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