Intercorporate Investment and Tax Avoidance: Evidence from ASEAN Developing Countries

Purpose: This study examines the relationship between intercorporate investment and tax avoidance in public firms in three developing ASEAN countries: Indonesia, the Philippines, and Vietnam. Design/methodology/approach: The s tudy employs a Random Effects Model to e xamine t he r elationship, using a balanced panel dataset comprising 206 firms from Indonesia, the Philippines, and Vietnam over the period 2018 to 2023, resulting in a total of 1,236 firm-year observations. The data was obtained from the Bloomberg Terminal and includes firms from all sectors except the financial sector. Statistical analysis was conducted using Stata, with multiple linear regression applied to test the research hypotheses. Findings: The findings reveal a statistically significant positive impact of intercorporate investment on tax avoidance. They also indicate a positive relationship between intercorporate investment and tax avoidance. Research limitations/implications: The study covers the period from 2018 to 2023, which captures recent developments but may not fully reflect long-term trends or structural economic shifts. Moreover, because the sample is confined to lower-middle-income ASEAN countries namely Indonesia, the Philippines, and Vietnam, the results may not generalize to other regions or to high-income economies with different economic structures, tax regimes, and regulatory frameworks. Accordingly, caution is warranted when applying these findings beyond the study's specific context. Originality/value: This research offers original insights by examining the immediate effects of intercorporate investment within a defined period and utilising an updated balanced panel dataset from the ASEAN developing market. The focus on intercorporate investment, a variable that has been relatively underutilised in previous studies, further enhances the novelty and contribution of this work.