Tax Litigation and Corporate Debt: A Brazilian Perspective

Authors

DOI:

https://doi.org/10.14392/asaa.2024170111

Keywords:

Tax Litigiousness, Indebtedness, Capital Structure, Brazilian firms, Financial strategies

Abstract

Objective: The study aims to explore the impact of tax litigation on the indebtedness levels of Brazilian firms. The research is motivated by Brazil's high volume of tax disputes and the lack of existing studies focusing on the relationship between tax litigation and firm indebtedness in this particular context.

Method: The sample includes non-financial firms listed on the Brazilian stock exchange from 2017 to 2022. Linear regression methodology, utilizing panel data and fixed effects, was employed to analyze the relationship. Tax litigation was quantified by summing tax provisions and contingent liabilities, which were then relativized by the firms' total assets. Data were sourced from Comdinheiro software, with additional information manually gathered from company explanatory notes.

Results or Discussion: The study found a positive relationship between tax litigation and firm indebtedness in Brazil. This suggests that companies involved in more tax disputes tend to have higher levels of debt, pointing towards a complex relationship between the two variables in the Brazilian economic landscape.

Contributions: This research fills a gap in existing literature by investigating the effects of tax litigation on the capital structure of Brazilian firms. It provides valuable insights that can be beneficial for policymakers, regulatory bodies, and firms in understanding the implications of tax disputes on financial strategies.

 

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Author Biographies

Antonio Lopo Martinez, Universidade de Coimba

Universidade de Coimbra.

Address: Faculdade de Direito da Universidade de Coimbra, Pátio da Universidade | 3004-528 | Coimbra | Portugal

   

Julia Leito Coutinho, Fucape Business School

Fucape Business School

Address: Instituição: Fucape, Vitória, Espírito Santo, Brasil

     

Henrique Formigoni, Universidade Mackenzie

Universidade Mackenzie

Address: Rua da Consolação, 930, Consolação, São Paulo-SP, CEP: 013020-000

       

Luis Paulo Guimarães dos Santos, Universidade Federal da Bahia

Universidade Federal da Bahia

Address: Avenida Reitor Miguel Calmon, s/n Vale do Canela, Salvador/Bahia
CEP 40.110-100

   

Published

2024-04-05

How to Cite

Lopo Martinez, A., Coutinho, J., Formigoni, H., & Santos, L. P. (2024). Tax Litigation and Corporate Debt: A Brazilian Perspective. Advances in Scientific and Applied Accounting, 17(1), 275–290/291. https://doi.org/10.14392/asaa.2024170111

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Section

ARTICLES