Corporate tax planning, the use of SPV, board independence, and firm value

  • Iman Sofian Suriawinata Sekolah Tinggi Ilmu Ekonomi Indonesia
  • Siti Almurni Sekolah Tinggi Ilmu Ekonomi Indonesia
Keywords: Corporate tax planning, firm value, special purpose vehicles, board independence


Although many studies discuss the significant role of special purpose vehicles (SPVs) in the corporate tax planning context, no prior empirical research exists on the value relevance of such use. Our study fills the gap by investigating the impact of the use of SPVs in corporate tax planning on firm value. Since tax planning is a risky endeavor, of particular interest is the role of corporate governance mechanisms in ensuring that firms select optimal levels of corporate tax planning activities and preventing managerial diversion of tax-saving related cash flows. Using moderated regression analysis on a sample of 119 listed non-financial firms from 2013 to 2017, we find that the use of SPVs in corporate tax planning enhances firm value and that corporate tax planning moderated by board independence also increases firm value.


Download data is not yet available.


Amidu, M., Yorke, S. M., & Harvey, S. (2016). The effects of financial reporting standards on tax avoidance and earnings quality: A case of an emerging economy. Journal of Accounting and Finance, 16(2), 11–27.

Arel-Bundock, V. (2017). The unintended consequences of bilateralism: Treaty shopping and international tax policy. International Organization, 71(2), 349–371.

Armstrong, C. S., Blouin, J. L., Jagolinzer, A. D., & Larcker, D. F. (2015). Corporate governance, incentives, and tax avoidance. Journal of Accounting and Economics, 60(1), 1–17.

Armstrong, C. S., Blouin, J. L., & Larcker, D. F. (2012). The incentives for tax planning. Journal of Accounting and Economics, 53(1–2), 391–411.

Balakrishnan, K., Blouin, J. L., & Guay, W. R. (2019). Tax aggressiveness and corporate transparency. The Accounting Review, 94(1), 45–69.

Beladi, H., Chao, C. C., & Hu, M. (2018). Does tax avoidance behavior affect bank loan contracts for Chinese listed firms? International Review of Financial Analysis, 58, 104–116.

Bilicka, K., & Fuest, C. (2014). With which countries do tax havens share information? International Tax and Public Finance, 21(2), 175–197.

Bird, A., & Karolyi, S. A. (2017). Governance and taxes: Evidence from regression discontinuity. The Accounting Review, 92(1), 29–50.

Brigham, E. F., & Daves, P. R. (2019). Intermediate financial management (13th ed.). Cengage Learning, Inc.

Canback, S., Samouel, P., & Price, D. (2006). Do diseconomies of scale impact firm size and performance? A theoretical and empirical overview. Journal of Managerial Economics, 4(1), 27–70.

Chan, K. H., Mo, P. L. L., & Tang, T. (2016). Tax avoidance and tunneling: Empirical analysis from an agency perspective. Journal of International Accounting Research, 15(3), 49–66.

Chen, X., Hu, N., Wang, X., & Tang, X. (2014). Tax avoidance and firm value: Evidence from China. Nankai Business Review International, 5(1), 25–42.

Chung, K. H., & Pruitt, S. W. (1994). A simple approximation of Tobin’s q. Financial Management, 23(3), 70–74.

Chung, K. H., & Zhang, H. (2011). Corporate governance and institutional ownership. Journal of Financial and Quantitative Analysis, 46(1), 247–273.

Damodaran, A. (2012). Investment valuation: Tools and techniques for determining the value of any asset (3rd ed.). John Wiley & Sons, Inc.

Desai, M. A., & Dharmapala, D. (2006). Corporate tax avoidance and high-powered incentives. Journal of Financial Economics, 79(1), 145–179.

Desai, M. A., & Dharmapala, D. (2009). Corporate tax avoidance and firm value. Review of Economics and Statistics, 91(3), 537–546.

Desai, M. A., Dyck, A., & Zingales, L. (2007). Theft and taxes. Journal of Financial Economics, 84(3), 591–623.

Dewanata, P., & Achmad, T. (2017). Pengaruh perencanaan pajak terhadap nilai perusahaan dengan kualitas corporate governance sebagai variabel moderasi (Studi empiris pada perusahaan manufaktur yang terdaftar di BEI pada tahun 2012-2014). Diponegoro Journal of Accounting, 6(1), 1–7.

Dharmapala, D., & Hines, J. R. (2009). Which countries become tax havens? Journal of Public Economics, 93(9–10), 1058–1068.

Dunbar, A., Higgins, D. M., Phillips, J. D., & Plesko, G. A. (2010). What do measures of tax aggressiveness measure? 103rd Annual Conference on Taxation, 18–26.

Fama, E. F., & Miller, M. H. (1972). The theory of finance. Dryden Press.

Feng, M., Gramlich, J. D., & Gupta, S. (2009). Special purpose vehicles: Empirical evidence on determinants and earnings management. The Accounting Review, 84(6), 1833–1876.

Gorton, G., & Souleles, N. S. (2005). Special purpose vehicles and securitization. In NBER Working Paper No. 11190.

Greene, W. H. (2018). Econometric analysis (8th ed.). Pearson Education Inc.

Han, J., Park, K., & Pennacchi, G. (2015). Corporate taxes and securitization. The Journal of Finance, 70(3), 1287–1321.

Hanlon, M., & Heitzman, S. (2010). A review of tax research. Journal of Accounting and Economics, 50(2–3), 127–178.

Hanlon, M., Maydew, E. L., & Thornock, J. R. (2015). Taking the long way home: U.S. tax evasion and offshore investments in U.S. equity and debt markets. The Journal of Finance, 70(1), 257–287.

Hoffman Jr., W. H. (1961). The theory of tax planning. Accounting Review, 36(2), 274–281.

Hong, Q., & Smart, M. (2010). In praise of tax havens: International tax planning and foreign direct investment. European Economic Review, 54(1), 82–95.

Inger, K. K. (2014). Relative valuation of alternative methods of tax avoidance. Journal of the American Taxation Association, 36(1), 27–55.

Inger, K. K., & Vansant, B. (2019). Market valuation consequences of avoiding taxes while also being socially responsible. Journal of Management Accounting Research, 31(2), 75–94.

Jensen, M. C. (1999). Agency cost of free cash flow, corporate finance, and takeovers. American Economic Review, 76(2), 323–329.

Jiménez-Angueira, C. E. (2018). The effect of the interplay between corporate governance and external monitoring regimes on firms’ tax avoidance. Advances in Accounting, 41, 7–24.

Karpavičius, S., & Yu, F. (2017). How institutional monitoring creates value: Evidence for the free cash flow hypothesis. International Review of Economics and Finance, 52, 127–146.

Khaoula, F., & Dabboussi, M. (2019). The moderating effect of the board of directors on firm value and tax planning: Evidence from European listed firms. Borsa Istanbul Review, 19(4), 331–343.

Khaoula, F., & Ghardallou, W. (2020). International tax planning techniques: a review of the literature. Journal of Applied Accounting Research, 21(2), 329–343.

Kim, J.-B., Song, B. Y., & Wang, Z. (2017). Special purpose entities and bank loan contracting. Journal of Banking & Finance, 74, 133–152.

Kirkpatrick, A. K., & Radicic, D. (2020). Tax planning activities and firm value: A dynamic panel analysis. In J. Hasseldine (Ed.), Advances in Taxation (Vol. 27, pp. 103–123). Emerald Publishing Limited.

Koller, T., Goedhart, M., & Wessels, D. (2020). Valuation: Measuring and managing the value of companies. In McKinsey & Company Inc. (7th ed.). John Wiley & Sons, Inc.

Kollruss, T. (2012). Tax structuring and the value of the firm. Utilization of affiliated financial intermediary SPEs and hybrid instruments in investment banking. Investment Management and Financial Innovations, 9(2), 128–135.

Lemmon, M., Liu, L. X., Mao, M. Q., & Nini, G. (2014). Securitization and capital structure in nonfinancial firms: An empirical investigation. The Journal of Finance, 69(4), 1787–1825.

Lewellen, W. G., & Badrinath, S. G. (1997). On the measurement of Tobin’s q. Journal of Financial Economics, 44(1), 77–122.

Li, Y., & Ma, M. (Shuai). (2022). Are tax havens and offshore financial centers cracked down on? A study on the international standard of exchange of information on request. The Accounting Review, 97(7), 295–318.

Limpaphayom, P., Rogers, D. A., & Yanase, N. (2019). Bank equity ownership and corporate hedging: Evidence from Japan. Journal of Corporate Finance, 58, 765–783.

Lindenberg, E. B., & Ross, S. A. (1981). Tobin’s q ratio and industrial organization. The Journal of Business, 54(1), 1–32.

Mayberry, M. A., McGuire, S. T., & Omer, T. C. (2015). Smoothness and the value relevance of taxable income. Journal of the American Taxation Association, 37(2), 141–167.

McGuire, S. T., Omer, T. C., & Wang, D. (2012). Tax avoidance: Does tax-specific industry expertise make a difference? The Accounting Review, 87(3), 975–1003.

OECD. (2020). Glossary of tax terms. OECD.Org.

Phillips, R., Gardner, M., Robins, A., & Surka, M. (2017). Offshore shell games 2017: The use of offshore tax havens by Fortune 500 companies. In Institute on Taxation and Economic Policy (ITEP) and U.S. PIRG Education Fund.

Phillips, R., Petersen, H., & Palan, R. (2021). Group subsidiaries, tax minimization and offshore financial centres: Mapping organizational structures to establish the ‘in-betweener’ advantage. Journal of International Business Policy, 4(2), 286–307.

Pradnyana, I. B. G. P., & Noviari, N. (2017). Pengaruh perencanaan pajak terhadap nilai perusahaan dengan transparasi perusahaan sebagai variabel moderasi. E-Jurnal Akuntansi Universitas Udayana, 18(2), 1398–1425.

Prastiwi, D., & Walidah, A. N. (2020). Pengaruh agresivitas pajak terhadap nilai perusahaan: Efek moderasi transparansi dan kepemilikan institusional. Jurnal Ekonomi Dan Bisnis, 23(2), 203–224.

Rasmussen, S. (2013). Production economics: The basic theory of production optimisation (2nd ed.). Springer.

Richardson, G., & Taylor, G. (2015). Income shifting incentives and tax haven utilization: Evidence from multinational U.S. firms. The International Journal of Accounting, 50(4), 458–485.

Richardson, G., Taylor, G., & Lanis, R. (2013). The impact of board of director oversight characteristics on corporate tax aggressiveness: An empirical analysis. Journal of Accounting and Public Policy, 32(3), 68–88.

Ross, S. A., Westerfield, R. W., Jaffe, J., & Jordan, B. D. (2019). Corporate finance (12th ed.). McGraw-Hill Inc.

Scholes, M. S., Wolfson, M. A., Erickson, M. M., Hanlon, M. L., Maydew, E. L., & Shevlin, T. J. (2015). Taxes and business strategy (5th ed.). Pearson Education, Inc.

Schwab, C. M., Stomberg, B., & Williams, B. M. (2022). Effective tax planning. The Accounting Review, 97(1), 413–437.

Shams, S., Bose, S., & Gunasekarage, A. (2022). Does corporate tax avoidance promote managerial empire building? Journal of Contemporary Accounting & Economics, 18(1), 100293.

Sharma, S., Durand, R. M., & Gur-Arie, O. (1981). Identification and analysis of moderator variables. Journal of Marketing Research, 18(3), 291–300.

Shukla, G., Pandey, S. K., & Lingam, S. (2020). Tax effects of treaty shopping and OECD’s BEPS implications. FIIB Business Review, 9(2), 85–93.

Suriawinata, I. S. (2019). Does the use of special purpose entities affect firm value? Evidence from Indonesian listed nonfinancial firms. Proceedings of the 5th Annual International Conference on Management Research (AICMaR 2018), 45–49.

Suriawinata, I. S., & Nurmalita, D. M. (2022). Ownership structure, firm value and the moderating effects of firm size: Empirical evidence from Indonesian consumer goods industry. Jurnal Manajemen Dan Kewirausahaan, 24(1), 91–104.

Taylor, G., & Richardson, G. (2014). Incentives for corporate tax planning and reporting: Empirical evidence from Australia. Journal of Contemporary Accounting & Economics, 10(1), 1–15.

Taylor, G., Richardson, G., & Lanis, R. (2015). Multinationality, tax havens, intangible assets, and transfer pricing aggressiveness: An empirical analysis. Journal of International Accounting Research, 14(1), 25–57.

Taylor, G., Richardson, G., & Taplin, R. (2015). Determinants of tax haven utilization: Evidence from Australian firms. Accounting & Finance, 55(2), 545–574.

Townsend, J. A. (2001). Tax treaty interpretation. The Tax Lawyer, 55(1), 219–307.

US Supreme Court. (1935). Gregory v. Helvering, 293 U.S. 465, 469 (1935) (p. 465).

Visconti, R. M. (2013). Evaluating a project finance SPV: Combining operating leverage with debt service, shadow dividends and discounted cash flows. International Journal of Economics, Finance and Management Sciences, 1(1), 9–20.

Wahab, N. S. A., & Holland, K. (2012). Tax planning, corporate governance and equity value. The British Accounting Review, 44(2), 111–124.

Weston, J. F., & Shastri, K. (2014). Financial theory and corporate policy (4th ed.). Pearson Education Limited.

Weyzig, F. (2013a). International finance and tax avoidance via Dutch special purpose entities. Paper for Presentation at Research Seminar, Radboud University Nijmegen, 21 October 2013.

Weyzig, F. (2013b). Tax treaty shopping: Structural determinants of foreign direct investment routed through the Netherlands. International Tax and Public Finance, 20(6), 910–937.

Wilde, J. H., & Wilson, R. J. (2018). Perspectives on corporate tax planning: Observations from the past decade. Journal of the American Taxation Association, 40(2), 63–81.

Williamson, O. E. (1975). Markets and hierarchies: Analysis and antitrust implications: A study in the economics of internal organization. The Free Press.

Williamson, O. E. (1996). The mechanisms of governance. Oxford University Press.
How to Cite
Suriawinata, I., & Almurni, S. (2023). Corporate tax planning, the use of SPV, board independence, and firm value. Jurnal Ekonomi Dan Bisnis, 26(1), 67-90.