TABLE OF CONTENTS
Page No.
Acknowledgment
Abbreviation & Forms
List of Table
List of Figure
Chapter 1: Introduction 1-23
1.1 Introduction 1
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1.2 Background of the Study 1
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1.3 Statement of the Problem 7
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1.4 Research Questions 12
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1.5 Objectives of the Study 12
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1.6 Research Gaps and Interventions us 13
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1.7 Significance of the Study 15
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1.8 Contributions of the Study 19
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1.9 Scope and Delimitations of the Study 21
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1.10 Corporate Taxation in India 22
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1.11 Corporate Taxation in the USA 22
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1.12 Structure of the Thesis 22
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1.13 Summary 23
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Chapter 2: Theoretical and Analytical Framework 24-70
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2.1 Introduction 24
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2.2 Operational Terminologies 24
2.3 Setting: Accounting for Income Taxes 31
2.4 Tax Planning, Tax Avoidance, and Tax Evasion of Corporates 34
2.4.1 Corporate Tax Planning 34
2.4.1.1 Types of Tax Planning 35
2.4.2 Tax Strategies 38
2.4.3 Multinational Tax Planning 40
2.4.3.1 Starbucks Group Tax planning 41
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2.4.3.2 Vodafone Group Tax Planning 43
2.5 Corporate Tax Avoidance 45
2.5.1 Tax Base (TB) Avoidance 47
2.5.2 Tax Rate (TR) Avoidance 48
2.5.3 Hybrid Tax Avoidance 48
2.6 Tax Planning or Tax Avoidance: Grey Sense and Debate 49
2.7 Corporate Tax Evasion 52
2.8 Theoretical Review 53
2.8.1 Tax Planning Theory – Hoffman 54
2.8.2 Scholes-Wolfson (S-W) Framework 54
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2.8.3 Modigliani and Miller (M-M) Theory 56
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2.8.3 Political Power and Political Cost Theory 58
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2.9 Analytical Framework 60
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2.9.1 Estimation of ASTR & BTDASTR us 62
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2.9.2 Tax planning & BTD 65
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2.9.3 Tax planning & ETR 68
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2.10 Summary 70
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Chapter 3 Review of Literature and Hypotheses 71-126
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3.1 Introduction 71
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3.2 Corporate Tax Planning: Literature Tone up to 1990s 71
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3.3 Corporate Tax Planning: Conceptual Reviews 72
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3.3.1 Tax and Non-tax factors 74
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3.3.1.1 Financial Reporting 74
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3.3.1.2 Inventory accounting 74
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3.3.1.3 Intertemporal Income Shifting 75
3.3.1.4 Capital Structure, Divestitures, and Asset
Sales 76
3.3.2 Agency Cost 76
3.3.2.1 Compensation 77
3.3.2.2 Tax Shelters 78
3.3.3 Taxes and Asset Prices 80
3.3.3.1 Merger and Acquisition (M&A) 80
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3.3.4 Capital Structure 82
3.3.5 Multi-jurisdictional Tax Research 84
3.4 Tax Planning and Measurements 86
3.4.1 Effective Tax Rate (ETR) 88
3.4.1.1 GAAP ETR (GETR) 91
3.4.1.2 Cash ETR (CETR) 91
3.4.1.3 Long-run cash ETR (LETR) 92
3.4.1.4 Current ETR (CUETR) 93
3.4.1.5 Modified ETR (METR) 93
3.4.2 Book-Tax differences (BTDs) 93
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3.4.2.1 ETR Differential & DTAX 94
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3.4.2.2 Abnormal BTD 95
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3.4.3 Average Statutory Tax Rate (ASTR) & BTDASTR 96
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3.4.4 Unrecognized Tax Benefits (UTB)
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3.4.5 Tax Shelters 96
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3.4.6 Marginal Tax Rate (MTR) 97
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3.5 Tax Planning Determinants and Hypotheses 97
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3.5.1 Asset Mix and Tax Planning 98
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3.5.1.1 Tax Planning and Capital Intensity 99
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3.5.1.2 Inventory Intensity and Tax Planning 101
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3.5.1.3 R&D Intensity and Tax Planning 103
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3.5.2 Financing Decision and Tax Planning 105
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3.5.2.1 Tax Planning and Leverage 106
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3.5.3 Profitability and Tax Planning 107
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3.5.4 Tax planning and Firm Size 110
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3.5.5 Audit Quality and Tax Planning 113
3.5.6 Tax Haven Utilization and Tax planning 114
3.5.7 STR and Tax Planning 116
3.5.8 Inflation and Tax Planning 117
3.5.9 Sector of Activity and Tax Planning 118
3.5.10 Tax Reformation and Tax Planning 118
3.5.11 Tax Haven Subsidiaries and Tax Planning 121
3.5.11.1 Tax Havens and ETR 121
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3.5.11.2 Tax Havens and BTD 123
3.5.11.3 Tax Havens and TPS 125
3.6 Summary 126
Chapter 4 Research Methodology 127-155
4.1 Introduction 127
4.2 Sample Frame & Time Horizon 127
4.3 Sample Construction 128
4.4 Database and Statistical Software 129
4.5 Measurement & Definition of Variables 130
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4.5.1 Effective Tax Rates 131
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4.5.2 Book-Tax Differences (BTDSTR) 134
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4.6 Variable Definitions 137
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4.6.1 Dependent variables 137
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4.6.1.1 Effective Tax Rate (ETR) us 137
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4.6.1.2 Book-Tax Difference (BTD ) 137
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4.6.2 Explanatory Variables 137
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4.6.2.1 Capital Intensity (CI) 137
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4.6.2.2 Inventory Intensity (INVI) 138
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4.6.2.3 R&D Intensity (RDI) 138
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4.6.2.4 Leverage (LEV) 138
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4.6.2.5 Profitability (ROA) 139
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4.6.2.6 Firms Size (LTA) 139
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4.6.2.7 Audit Quality (BIG4) 139
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4.6.2.8 Tax Haven Utilization (THU) 139
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4.6.3 Control Variables 140
4.6.3.1 Statutory Tax Rate (STR) 140
4.6.3.2 Inflation (INFL) 140
4.6.3.3 Sector of Activity (SEC) 140
4.6.4. Additional Variables 141
4.6.4.1 Tax Reformation Variable 141
4.6.4.2 Tax Planning Score (TPS) 141
4.7 Statistical Data Analysis 145
4.7.1 Descriptive Statistics 145
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4.7.2 Inferential Statistics 145
4.7.2.1 Panel Data Analysis 146
4.8 Model Specification 148
4.8.1 Regression Diagnostics 148
4.8.1.1 Data Screening 148
4.8.1.2 Outliers Detection 149
4.8.1.3 Test for Normality 149
4.8.1.4 Multicollinearity 150
4.8.1.5 Hausman’s Specification Test 150
4.8.1.6 Homoscedasticity Test 151
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4.8.1.7 Autocorrelation/Serial Correlation Test 152
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4.9 Robustness Check 152
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4.10 Moderation Analysis (Interaction Effects) 153
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4.11 Independent T-Test us 155
4.12 Supplementary Analysis 155
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4.13 Summary 155
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Chapter 5 Data Analysis and Interpretations 156-213
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5.1 Introduction 156
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5.2 Data Screening 156
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5.3 Descriptive Statistics – A Comparative Analysis 157
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5.4 Panel Data Descriptives – Combined 162
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5.5 Sector-wise Descriptive Analysis 165
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5.6 Correlations Analysis 177
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5.7 Regression Diagnostics 180
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5.7.1 Normality Test 180
5.7.2 Multicollinearity Test 181
5.7.3 Endogeneity Test 183
5.7.4 Heterogeneity Test 185
5.7.5 Serial Correlation Test 186
5.8 Tax Planning and Firm-specific Determinants (H1-H10) 186
5.8.1 Pooled-OLS Regression Results – ETR 187
5.8.2 Random-Effect Regression Result – ETR 188
5.8.3 Fixed-Effect Regression Result – ETR 190
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5.9 Hypothesis Test Results 191
5.9.1 Tax Planning and Capital Intensity (H1) 192
5.9.2 Tax Planning and Inventory Intensity (H2) 193
5.9.3 Tax Planning and R&D Intensity (H3) 194
5.9.4 Tax Planning and Leverage (H4) 195
5.9.5 Tax Planning and Profitability (H5) 196
5.9.6 Tax Planning and Firm Size (H6) 197
5.9.7 Tax planning and Audit Quality (H7) 198
5.9.8 Tax planning and Tax Haven Utilization (H8) 199
5.9.9 Tax planning and Statutory Tax Rates (H9) 201
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5.9.10 Tax planning and Inflation (H10) 201
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5.9.11 Robustness Check Result 202
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5.9.12 Sensitivity Test (Moderation Analysis – H11) 206
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5.9.13 Tax Haven Subsidiaries and Tax Planning (H12)
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5.9.13.1Tax Havens and ETR (H12a-H12b) 209
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5.9.13.2 Tax Havens and BTD (H12c-H12d) 210
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5.9.13.3 Tax Havens and TPS (H12e-H12f) 212
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5.10 Summary 213
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Chapter 6 Findings, Suggestions and Conclusions 214-229
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6.1 Introduction 214
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6.2 Findings of the Study 214
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6.2.1 Findings from Descriptive Analysis 214
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6.2.2 Findings Related to Objective 1 215
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6.2.3 Findings Related to Objective 2 217
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6.2.4 Findings Related to Objective 3 218
6.3 Implications of the Study 219
6.3.1 Academic and Practical Implications 220
6.3.2 Policymaking Implications 221
6.4 Suggestions and Future Directions 222
6.5 Limitations of the study 225
6.6 Conclusion 227
Bibliography 230-262
Appendices i-xi
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