조세회피의 비조세비용 - 조세회피가 자본비용, 매출, 신용평가점수에 미치는 영향을 중심으로 -

This study investigates whether non-tax costs of tax avoidance exists and how investors, creditors, credit analysts and customers perceive corporate tax avoidance. Korean listed companies are required to disclose tax audit penalties if tax audit penalties are above 5% of its equity. Even though tax avoidance can improve the firm’s after-tax cash flow, some companies appear to be engaged in little or no tax avoidance. The anecdotal evidence suggests that there is wide variation in tax avoidance across firms. In the prior literature, non-tax costs arising form tax avoidance are suggested as a possible reason for the variation in tax avoidance across firms. Hanlon and Slemrod(2009) show that market reacts negatively to the tax shelter involvement. However, Gallemore et al. (2014) cast doubts whether tax avoidance causes reputational costs. They do not find evidence that firms or their top executives bear reputational costs from tax shelter involvement. In spite of these mixed results, we know little about non-tax costs of tax avoidance. This study fills this gap. We analyze a sample of non-financial firms disclosing tax audit penalties over 2001-2013. Korea provides an ideal research setting for analyzing data on tax avoidance since for Korean listed companies the disclosure of tax audit penalties is mandatory. Prior studies including Gallemore et al. (2014) examine non-tax costs of tax avoidance by using the firms that tax shelter revelation occurred. However, tax shelter is only a kind of strategy that firms can choose to avoid tax. In this respect, our study has the merit in that it can cover all kinds of illegal tax avoidance strategies by using real tax audit results that listed firms mandatorily disclose in the market. We begin by examining non-tax costs of tax avoidance in terms of investors and creditors. The disclosure of tax avoidance may raise question on the firm’s honesty and business ethics. We conjecture that investors and creditors require a higher cost of capital for companies disclosing tax audit penalties, because illegal tax avoidance increases agency problems and decreases transparency. Next, we examine whether customers put tax avoidance firms to non-tax costs. Since societal demands on corporate social responsibility increase, disclosure of tax avoidance may damage the firm’s brand values and sales. Furthermore, we examine how credit analysts react to the disclosure of tax audit penalty. Prior studies suggest that credit analysts play a role as a sophiscated information intermediary and reflect tax risk on their credit ratings properly. It is interesting question worthy of study how credit analysts respond to disclosure of tax audit penalty. The empirical results are as follows. We do not find evidence of increased cost of capital following the tax audit penalty disclosure relative to the cost of capital for matched control firms. However, we find that the more tax audit penalties, the higher cost of capital. Similarly, We do not find evidence of decreased sales following the tax audit penalty disclosure relative to the sales for matched control firms. However, in the analyses using the amount of tax audit penalties, we find cost of capital increases with tax audit penalties and sales(or change in sales) decrease with tax audit penalties. Credit ratings also fall into decline with tax audit penalties, but this result is observed only in the regular tax audit sample. Furthermore, we investigate the differential effects of firm size on non-tax costs of tax avoidance. We find that the positive relation between tax audit penalties and cost of capital and the negative relation between tax audit penalties and sales(or change in sales) are more noticeable for small and medium sized firms than large firms. It seems that market reacts more negatively to the tax audit penalties of small firms because small firms have lower litigation capacity than large firms. Furthermore, we find that tax audit penalties do not significantly affect the firm’s effective tax rates following the tax audit penalty disclosure. Our study contributes to the tax avoidance literature in the following ways. We show that the disclosure of tax evasion itself dose not drive up reputational costs, but the amount of tax audit penalties has a positive relationship with the negative market reactions. As we know, our study is the first attempt to combine amount of tax audit penalty and market reaction to the tax evasion. Prior literature does not investigate the differential effects depending on the seriousness of tax avoidance. Even though a firm is imposed tax audit penalties, tax audit penalties might be canceled if the company appeals against a decision. However, if the penalties are substantial, tax risk arising from tax audit penalties is increasing. In this respect, our study extend prior literature by considering the size of cash outflow from tax avoidance detection. It will be able to shed light on the under-sheltering puzzle. Furthermore, we investigate the differential effects of the type of tax audit or firm size on the reputation costs of tax avoidance. Our study shows that market reacts more negatively to the routine tax audit results than special audit results, and small firms than large firms. It implies that the positive relation between non-tax costs and amount of tax audit penalty are conditional on the type of tax audit and firm size. This study has a contribution suggesting that non-tax costs are not driven simply by whether or not the firm engage in tax evasion, rather market imposes non-tax costs based on the seriousness of tax evasion.