Tax Risk, Corporate Governance, and the Valuation of Tax Avoidance Across Philippine Firms: How Do Investors Value Corporate Tax Avoidance?

Tax avoidance has traditionally been thought to enhance firm value because it generates cash savings for reinvestment or distribution to shareholders. More recent literature, however, suggests that tax avoidance valuation may not be so simple. Desai and Dharmapala (2009) introduced the “agency perspective” on tax avoidance, arguing that investors consider the risk of tax avoidance as opening opportunities for managers to extract rents from their firms. Positive tax avoidance value would therefore be conditional on good corporate governance quality. Drake et al. (2017) introduced yet another dimension—tax risk—to the valuation of tax avoidance, arguing that tax avoidance that comes with less variability in tax outcomes (i.e., comes with lower tax risk) should be preferred to those that come with more because investors prefer stable earnings over risky earnings. This policy brief discusses our findings on how public investors in the Philippines value corporate tax avoidance in the contexts of tax risk and corporate governance quality, and policies that can be implemented to enhance firm transparency, increase tax revenues, and raise firm valuations

Walang iwanan! An impact evaluation study of the Gawad Kalinga housing project in the Philippines

Poverty alleviation is one of the UN\u27s Sustainable Development Goals and has been the goal of every country around the world. In the Philippines, poor living standards are the most evident dimension of poverty, as can be seen through the sprawling slum areas with neither safe shelters nor good sanitation. Since 2003, a non-governmental organization called Gawad Kalinga (GK) has helped the government\u27s efforts to alleviate poverty through slum upgrading. They have not only provided safe shelters and good sanitation but have also empowered communities of beneficiaries through their housing projects. However, despite the success of its programs, no impact evaluation study has been conducted to formally assess its impact.This paper evaluates the impact of the Gawad Kalinga (GK) housing program through propensity score matching using a cross-sectional data of households gathered through the CBMS Accelerated Poverty Profiling survey conducted in 2017. Our study confirms higher total wages in kind by approximately PHP 2,272 (USD 46.83) and a slight improvement in the water supply for beneficiaries compared to non-beneficiaries with similar characteristics. These signify a positive impact of the Gawad Kalinga housing program on improving the lives and reducing the poverty of poor Filipino families

Effect of firm characteristics and corporate governnace on earnings management: Evidence from publicly listed property sector in the Philippines

Two types of earnings management, opportunistic and efficient motive, were presented in the literature. This paper aimed to investigate the type of earnings management employed by publicly listed property sector firms in the Philippines. Furthermore, the study also examined the effect of firm characteristics and corporate governance practices on firm’s level of earnings management using discretionary accruals. In conducting this study, panel-data econometric technique; particularly the ordinary least squares was used to determine which among the firm-specific characteristics (profitability, leverage, cash flows from operations, and firm size) or corporate governance mechanisms (CEO duality, board size, board independence, and audit quality) significantly influence publicly listed property sector firms’ earnings management activities using discretionary accruals. Results show that these firms employ efficient type of earnings management. Also, cash flows from operations, firm size, and CEO duality are statistically significant predictors of earnings management for property firms. Except for cash flows from operations, these results contradict the initial findings of Cudia and Dela Cruz (2018) when they subjected the same model for industrial firms. Such similarity and differences warrant for further analysis on the peculiarities and intrinsic characteristics of the industrial and property sector in the Philippines. Such will point to certain policy frameworks in enabling earnings management to be harnessed in satisfying the firms’ bottom lines

Effect of firm characteristics and corporate governance practices on earnings management: Evidence from publicly listed property sector firms in the Philippines

Two types of earnings management (EM), opportunistic and efficient motive, were presented in the literature. This article aimed to investigate the type of EM employed by publicly listed property sector firms in the Philippines. Furthermore, the study also examined the effect of firm characteristics and corporate governance practices on firm’s level of EM using discretionary accruals. In conducting this study, panel data econometric technique, particularly the ordinary least squares was used to determine which among the firmspecific characteristics (profitability, leverage, cash flows from operations and firm size) or corporate governance mechanisms (CEO duality, board size, board independence and audit quality) significantly influence publicly listed property sector firms’ EM activities using discretionary accruals. Results show that these firms employ efficient type of EM. Also, cash flows from operations, firm size and CEO duality are statistically significant predictors of EM for property firms. Except for cash flows from operations, these results contradict with prior studies when the same model was subjected for industrial firms. Such similarities and differences from previous studies warrant for further analysis on the peculiarities and intrinsic characteristics of the industrial and property sector in the Philippines. Such will point to certain policy frameworks in enabling EM to be harnessed in satisfying the firms’ bottom lines