Master's – Determinants of effective taxation on profit of publicly traded companies in the Brazilian market

Tipo de evento: 
Defesa
Data e hora: 
21/01/2020 - 14:00 to 17:00

 

Mauro Soares Viana Júnior          

Master's – Determinants of effective taxation on profit of publicly traded companies in the Brazilian market

Advisor: Prof. Dr. Fernando Dal-Ri Murcia

Comission: Profs. Drs. Bruno Meirelles Salotti, Jorge de Souza Bispo and Mateus Alexandre Costa dos Santos  

 Class: 217, FEA-5

 ABSTRACT*

 This research aimed to analyze how the tax burden of publicly traded companies in the Brazilian market is affected by specific characteristics of such companies. For this purpose, the effects of specific corporate characteristics on the tax burden of companies listed on B3 were studied. The corporate characteristics studied were: (i) corporate investments abroad, (ii) corporate investments in tax havens, (iii) industry and (iv) practices of corporate mergers and incorporations. These variables represent issues generally omitted in the analyzes carried out by the international literature on ETR determinants, but they are present in national and international tax debates. The literature has consolidated the model of ETR determinants developed by Gupta and Newberry (1997). As determinants of ETR, the model incorporated the following variables: (i) company size, (ii) inventory intensity, (iii) capital intensity, (iv) leverage and (v) profitability (ROA). This research adopted the Gupta and Newberry (1997) model, as accepted in the literature, and began by applying this model to a database composed of 282 publicly traded Brazilian companies listed in B3, excluded financial and insurance companies, with data from periods 2010 to 2017 obtained from the Economatica database. Data were also collected from the CapitalIQ database, which provides information about subsidiaries of publicly traded companies, necessary to identify corporate investments abroad, and to identify corporate events of merger and incorporation. Companies'ETR were calculated for each company in each year, excluding observations containing negative Earnings Before Income Tax, as well as those with negative or zero ETR and those with ETR greater than 1. After applying the data treatments, the database resulted in an unbalanced panel containing 254 companies and 1,225 observations. An expanded model of ETR determinants was built from the model of Gupta and Newberry (1997), including dummy variables representing investments in tax havens, conducting merger and incorporation corporate operations, as well as a set of models. of dummies variables representing sectors of activity assigned by B3. Tests with the variable corporate investments abroad did not show statistical significance, and it is not possible to refute the hypothesis that this variable has no effect on ETR. The constructed model confirmed an ETR reduction of approximately 7.4 percentage points for companies that make investments in tax havens, as well as a reduction of approximately 3 percentage points in ETR of companies that have performed corporate merger or incorporation operations in the last 5 years. Finally, the influence of the sector of activity on the ETR of companies was confirmed. However, it is not possible to confirm the influence of two specific sectors of activity: Information Technology and Health. This research contributed to the creation of a determinant model. best adapted to the Brazilian market, showing a higher R2 coefficient than the original model by Gupta and Newberry (1997).

*Abstract provided by the author

 

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