TY - JOUR

T1 - Are financial derivatives related to intra-entities' tax aggressiveness? UK evidence

AU - Boussaidi , Ahmed

AU - Chkir , Imed

AU - Hussainey, Khaled

AU - Sidhom-Hamed , Mounira

PY - 2023/11/1

Y1 - 2023/11/1

N2 - This study investigates the effect of hedged versus nonhedged financial derivative instruments on the intra-entities' tax aggressiveness. Our findings provide evidence that multinational enterprises manage derivatives instruments to avoid their tax expenses aggressively. Specifically, nonhedged derivatives are an excellent determinant of the tax aggressiveness practices of corporate groups. Besides, this study speaks to the central role of governance quality in mitigating this aspect of tax aggressiveness and provides practical guidance to tax authorities and regulators for establishing new policies for governing financial derivative instruments and preventing tax aggressiveness from negatively affecting firms and society.

AB - This study investigates the effect of hedged versus nonhedged financial derivative instruments on the intra-entities' tax aggressiveness. Our findings provide evidence that multinational enterprises manage derivatives instruments to avoid their tax expenses aggressively. Specifically, nonhedged derivatives are an excellent determinant of the tax aggressiveness practices of corporate groups. Besides, this study speaks to the central role of governance quality in mitigating this aspect of tax aggressiveness and provides practical guidance to tax authorities and regulators for establishing new policies for governing financial derivative instruments and preventing tax aggressiveness from negatively affecting firms and society.

U2 - 10.1111/eufm.12395

DO - 10.1111/eufm.12395

M3 - Article

SP - 1505

EP - 1552

JO - European Financial Management

JF - European Financial Management

SN - 1354-7798

ER -