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Published in: Eurasian Business Review 4/2023

14-03-2023 | Regular Article

Performance shortfall, institutional logic and firms’ tax avoidance

Authors: Xi Zhong, Liuyang Ren, Ge Ren

Published in: Eurasian Business Review | Issue 4/2023

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Abstract

Based on the special background of transition economies, in which governments play a particularly important role in firms’ survival and development, we discuss the impact of performance shortfall on firms’ tax avoidance, which is a behavior that is considered unethical and irresponsible by the public. Drawing upon performance feedback theory and institutional theory, we propose that performance shortfall will drive firms to reduce tax avoidance to enhance their political legitimacy, thereby gaining more government support to solve current performance problems. We also argue that the relationship between performance shortfall and firms’ tax avoidance is likely nuanced and may vary by institutional logics (e.g., state-owned enterprises (SOEs)), and regional marketization degree). Specifically, we argue that SOEs will strengthen the above-mentioned relationship, and the regional marketization degree will weaken the above-mentioned relationship. After testing listed companies in China as the research object, we find that most of our theoretical views are supported by empirical evidence.

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Appendix
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Metadata
Title
Performance shortfall, institutional logic and firms’ tax avoidance
Authors
Xi Zhong
Liuyang Ren
Ge Ren
Publication date
14-03-2023
Publisher
Springer International Publishing
Published in
Eurasian Business Review / Issue 4/2023
Print ISSN: 1309-4297
Electronic ISSN: 2147-4281
DOI
https://doi.org/10.1007/s40821-023-00242-7

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