National culture and corporate tax avoidance: The moderating role of multinational versus domestic corporations
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2024-07-03
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en
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Corporate tax avoidance has consequences for all stakeholders of firms, therefore it is important to know what drives firms to engage in corporate tax avoidance. This thesis investigates the relation between national culture and corporate tax avoidance. To study this relation an unbalanced panel dataset is used consisting of 21,384 firm-year observations from listed firms in 53 countries over the period of 2015-2022. To measure national culture, Hofstede’s (2015) six cultural dimensions are used. Results show that the cultural dimensions Individualism, Masculinity, Uncertainty Avoidance, Long-term Orientation and Indulgence relate negatively to corporate tax avoidance, whereas the cultural dimension Power Distance is positively related to corporate tax avoidance. Additionally, this thesis finds that for domestic subsidiaries the negative effect of the dimensions Individualism, Long-term Orientation and Indulgence on corporate tax avoidance is stronger compared to multinational subsidiaries. Conversely for multinational subsidiaries the positive effect of the dimension Power Distance on corporate tax avoidance is stronger compared to domestic subsidiaries. This thesis contributes to existing literature by adding the sixth cultural dimension Indulgence, using more recent data, and investigating the distinction between multinational and domestic subsidiaries.
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Faculteit der Managementwetenschappen