Grant Richardson

The Determinants of Reserves Disclosure in the Extractive Industries: Evidence from Australian Firms

This paper examines the determinants of reserves disclosure (RD) in the Australian extractive industries. Our regression results indicate that RD are positively associated with variables relating to corporate governance, foreign listing, existence of reserves in foreign jurisdictions, pledging of reserves in debt covenants, leverage and external (Big 4) auditor, after controlling for firm size, subindustry, shareholder concentration and development/production stage. Additional regression testing shows that the existence of reserves in foreign jurisdictions is the most important determinant of RD in Australia. This paper contributes to a better understanding of the extent and rationale behind the RD practices of Australian resource firms.

Does a Firm’s Life Cycle Explain Its Propensity to Engage in Corporate Tax Avoidance?

Abstract This study examines whether a firm’s life cycle explains its propensity to engage in corporate tax avoidance. Based on the Dickinson (2011) model of firm life cycle stages and a large dataset of US publicly listed firms over the 1987–2013 period, we find that tax avoidance is significantly positively associated with the introduction and decline stages and significantly negatively associated with the growth and mature stages using the shake-out stage as a benchmark. We observe a U-shaped pattern in tax avoidance outcomes across the various life cycle stages in line with the predictions of dynamic resource-based theory. Our findings are consistent using several robustness checks. Overall, our results show that a firm’s life cycle stage is a significant determinant of tax avoidance.

Women on the board of directors and corporate tax aggressiveness in Australia An empirical analysis

Purpose - This paper aims to investigate the impact of women on the board of directors on corporate tax avoidance in Australia. Design/methodology/approach - The authors use multivariate regression analysis to test the association between the presence of female directors on the board and tax aggressiveness. They also test for self-selection bias in the regression model by using the two-stage Heckman procedure. Findings - This paper finds that relative to there being one female board member, high (i.e. greater than one member) female presence on the board of directors reduces the likelihood of tax aggressiveness. The results are robust after controlling for self-selection bias and using several alternative measures of tax aggressiveness. Research limitations/implications - This study extends the extant literature on corporate governance and tax aggressiveness. This study is subject to several caveats. First, the sample is restricted to publicly listed Australian firms. Second, this study only examines the issue of women on the board of directors and tax aggressiveness in the context of Australia. Practical implications - This research is timely, as there has been increased pressure by government bodies in Australia and globally to develop policies to increase female representation on the board of directors. Originality/value - This study is the first to provide empirical evidence concerning the association between the presence of women on the board of directors and tax aggressiveness.

Outside Directors, Corporate Social Responsibility Performance, and Corporate Tax Aggressiveness An Empirical Analysis

This study examines the impact of outside directors on the association between corporate social responsibility (CSR) performance and tax aggressiveness. Based on a sample of 5,007 firm-year observations over the 2003-2009 period, we find that there is a negative association between the interaction effect of the proportion of outside directors on the board and CSR performance, and tax aggressiveness. Our additional tests confirm the reliability of our main regression results. Overall, our results indicate that the presence of outside directors on the board magnifies the negative association between CSR performance and tax aggressiveness.

Market Risk Disclosures and Investment Efficiency: International Evidence from the Gulf Cooperation Council Financial Firms

This study examines the association between market risk disclosures (MRDs) and the investment efficiency of financial firms from six emerging markets in the Gulf Cooperation Council (GCC) region. Based on a sample of 553 firm-year observations over the 2007–2011 period, we find that MRDs are significantly and negatively associated with both under-investment and over-investment and that this association is more pronounced for larger firms. We also find that the association between MRDs and under-investment is moderated during periods of economic distress such as the Global Financial Crisis of 2008 and that the association between MRDs and over-investment is magnified during periods of reduced financial distress. Our results are consistent with the idea that MRDs reduce information asymmetry, which ultimately improves investment efficiency. We contribute to the literature in an emerging market context by providing empirical evidence on the association between MRDs and investment efficiency across six emerging GCC capital markets. This study also fills a gap in the literature by providing evidence on the factors affecting the investment efficiency of financial firms.

A Reply to Corporate Social Responsibility and Tax Aggressiveness: A Test of Legitimacy Theory

In reply to Fallan’s (2015) review of a prior corporate social responsibility (CSR) and tax aggressiveness research paper by Lanis and Richardson (2013) where comparison is made with Lanis and Richardson (2012), we note various seemingly inadequate claims. In particular, Fallan (2015) claims that the results of the two studies are contradictory in nature, and that the apparent contradiction can be explained by the definition and operationalization of tax aggressiveness. We strongly argue below that each study has a specific and therefore different research question which prevents a comparison of their empirical results. Moreover, the use of different tax aggressiveness proxy measures is justified by the theoretical framework of each of the Lanis and Richardson (2012, 2013) studies, and is not necessarily the source of any contradiction between them. Lanis and Richardson (2012) empirically test the hypothesis that ‘CSR activity’ is associated with tax aggressiveness. In particular, that firms which actually perform better with respect to their CSR activity are less likely to be tax aggressive. This hypothesis is consistent with a number of alternative views of the firm. In accordance with their research hypothesis, Lanis and Richardson (2012) consider tax aggressiveness as the dependent variable and CSR activity as the independent variable in the research design of this particular study. To proxy for CSR activity, an explicitly designed disclosure index was developed and employed by the researchers. However, Lanis and Richardson (2012) clearly explain the difference between ‘CSR disclosure’ and ‘CSR activity’ in this study by stating that:

The Determinants of Tax Evasion: A Cross-Country Study

The aim of this study is to build on the work of Riahi-Belkaoui (J Int Account Audit Tax 13: 135–143, 2004) and systematically examine on a cross-country basis, many of the key determinants of tax evasion identified by Jackson and Milliron (J Account Literat 5: 125–165, 1986). Based on data for 45 countries, the regression results show that non-economic determinants have the strongest impact on tax evasion. In particular, complexity is the most important determinant of tax evasion. Other important determinants of tax evasion are education, income source, fairness and tax morale. Overall, the regression results indicate that the lower the level of complexity and the higher the level of education, services income source, fairness and tax morale, the lower is the level of tax evasion. The findings are robust to various cross-country control variables, an alternative measure of tax evasion and several interactions.