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Access to finance and corporate tax avoidance: International evidence

Author

Listed:
  • Ramzi Benkraiem

    (Audencia Business School)

  • Safa Gaaya

    (DVHE - De Vinci Higher Education)

  • Faten Lakhal

    (DVHE - De Vinci Higher Education)

  • Merve Kilic

    (DEÜ - Dokuz Eylül Üniversitesi = Dokuz Eylül University [Izmir])

Abstract

This paper investigates the relationship between access to finance and corporate tax avoidance. Using a sample of 63,443 firm-year observations from 37 countries, the results reveal that firms suffering from limited access to finance are more inclined to engage in tax avoidance practices. This result supports the pecking-order theory and suggests that managers may rely on cash flows generated from tax-saving activities to finance their investments. The results also show that increased levels of financial constraints are positively associated with tax avoidance in the presence of high economic policy uncertainty (EPU). We also show that this effect is more prevalent in firms operating in countries with high government debt levels, and with weak investor protection. Our results are robust after addressing endogeneity concerns and using different measures of financial constraints, tax avoidance, and additional control variables.

Suggested Citation

  • Ramzi Benkraiem & Safa Gaaya & Faten Lakhal & Merve Kilic, 2025. "Access to finance and corporate tax avoidance: International evidence," Post-Print hal-05143196, HAL.
    • Handle: RePEc:hal:journl:hal-05143196
    DOI: 10.1016/j.intaccaudtax.2024.100668
    Note: View the original document on HAL open archive server: https://hal.science/hal-05143196v1
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