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Prior studies have examined the relationship between tax avoidance and corporate innovation, showing that innovative firms use their intellectual properties and research and development (R&D) activities to avoid taxes. This study aims to investigate the motivation behind tax avoidance practices within innovative firms.

This study uses the Compustat database to collect financial information for US companies, comprising 33,872 firm-year observations from 5,504 non-financial from 2011 to 2021. To ensure robust findings, the authors conducted the Hussman test to compare fixed effects and random effects models, the Breusch–Pagan test for heteroskedasticity and the Koenker and Machado test to assess coefficient consistency across quantiles in quantile regressions (QRs). Based on these tests, the authors used two empirical approaches: a random-effect model to examine the linear relationship between variables and QR to capture potential non-linear relationships and address heteroskedasticity issues.

Results indicate that corporate patent activity facilitates tax avoidance practices; however, not all innovative firms use their intellectual properties (e.g. patents) for this purpose. The association between tax avoidance and innovation is negative at the lowest quantile, suggesting that high innovation output and quality patents can enhance tax avoidance. This is likely because high-quality patents are valuable and generate more profit, increasing income shifted to foreign subsidiaries. In addition, the study found that innovative firms investing more in R&D benefit from tax advantages and pay less taxes than non-innovative firms. Finally, testing for the moderating effect of foreign income showed no impact on the relationship between tax avoidance and corporate innovation. The results are robust for alternative testing and measuring change.

To the best of the authors’ knowledge, this is one of the first studies to investigate the incentives that drive innovative firms to avoid taxes.

This paper aims to study the effect of Hofstede’s cultural dimensions (power distance, individualism, masculinity, uncertainty avoidance and long-term orientation) on corporate tax avoidance as proxied by the effective tax rate.

A sample of 944 observations during 2016 was analyzed at three different quantiles (Q 0.25, Q 0.50 and Q 0.75) based on a quantile regression approach.

Using Hofstede’s (2001) cultural dimensions (power distance, individualism, masculinity, uncertainty avoidance and long-term orientation), the authors find that individualism and masculinity are negatively associated with effective tax rates, and this negative relationship is more pronounced under low tax aggressiveness regime (third quantile). By contrast, long-term orientation is positively associated with the effective tax rate, and this relationship is more prevailing under aggressive tax regime (first quantile). These findings remain stable when using cash effective tax rate as an alternative measure for tax avoidance.

This study adds to the extant literature a further understanding of the impact of cultural dimensions on tax avoidance. The use of quantile regression approach shows how the effect of masculinity, individualism and long-term orientation on tax avoidance varies under different tax management regimes.

This study aims to investigate the effect of national culture (power distance, individualism, masculinity, uncertainty avoidance and long-term orientation) on audit report lag.

The authors use two econometric approaches (ordinary least squares (OLS) and quantile regression) using STATA software for a sample of 1,208 firm-year observations over the period of 2017–2018.

Using Hofstede’s (2001) cultural dimensions (power distance, individualism, masculinity, uncertainty avoidance and long-term orientation), the authors find that masculinity and long-term orientation are positively associated with audit report lag, while uncertainty avoidance is negatively associated with the same variable. Quantile regressions suggest that the adverse effect of masculinity on audit report lag is more prevailing for companies communicating companies' annual reports in a timely manner. Furthermore, the positive association between power distance and audit report lag exists only under tardy disclosure regime. Quantile regressions also confirm that the negative (positive) effect of uncertainty avoidance (long-term orientation) on audit report lag is maintained under different timely disclosure regime. Additional analysis conducted with respect to legal system shows that individualism becomes a significant predictor of audit delays with a significant negative effect for common law countries, while uncertainty avoidance has a positive effect on the same variable in civil law countries characterized by high level of discretion and secrecy.

The results of this study suggest that national culture as an informal institution may complement formal institutions (e.g. financial markets) in promoting timely disclosure. For instance, foreign investors may view high uncertainty avoidance scores, in common law emerging economies, as an indicator of transparency and timely disclosure.

This study adds to the extant literature a further understanding of the impact of cultural dimensions on timely disclosure, as proxied by, audit report lag. The use of quantile regression approach shows how different timely disclosure regime may affect the association between masculinity, power distance and audit report lag.