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The effect of IFRS adoption and law enforcement on book tax aggressiveness: evidence from Asean countries

Abstract

Firms are arguably motivated to exhibit tax aggressiveness because tax constitutes a significant portion of firms’ total costs. This study aims to test the effects of IFRS adoption and law enforcement on book-tax aggressiveness in six developing ASEAN countries. Our sample is 29,504 firm-year observations generated from Thomson Reuters Eikon for the years 2000–2017. The results show that IFRS adoption has a positive effect on book-tax aggressiveness,  indicating that firms tend to prioritize book-tax aggressiveness over book-tax conformity. Further, law enforcement negatively affects book-tax aggressiveness. All in all, our findings imply that law enforcement is very crucial for ASEAN countries to enhance managers’ awareness of not engaging the book-tax aggressiveness practice.

Keyword : tax reporting aggressiveness, financial reporting aggressiveness, IFRS, law enforcement

How to Cite
Damayanti, T. W. (2019). The effect of IFRS adoption and law enforcement on book tax aggressiveness: evidence from Asean countries. Business: Theory and Practice, 20, 284-292. https://doi.org/10.3846/btp.2019.27
Published in Issue
Jul 11, 2019
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