Birds of a Feather Flocking Together: Sustainability of Tax Aggressiveness of Shared Directors from Coercive Isomorphism

Round 1

Reviewer 1 Report

The study explores the linkages between tax aggression and shared directors showing the rationale for this relation in the introduction.

In the introduction, information is provided regarding the factors affecting tax aggressiveness and the aspects researchers focus on. Moreover, the relation between tax aggression and corporate governance variables is presented. The study's contribution is made clear to the reader in the introduction; however, the main findings are also presented to support this contribution (lines 114-125). I would expect these to be stated as 'aim' rather than conclusions derived from the empirical analysis.

Tax aggressiveness is explained in the literature part; however, the definition could be included in the introduction to make it easier perceived to the reader. Overall, the structure of the paper is evident to the reader, and the introduction is well constructed.

Literature sets the scene for the analysis providing information related to the fact that connected firms may share tax-planning information because of managerial behaviour leading in turn firms to be tax-aggressive. The hypotheses are generated based on the literature and the writing extends beyond describing or summarising the literature. There is good evidence of synthesis and integration, and sufficient evidence is provided in the writing to support the argument(s) put forward.

In the data and methodology section, data sources are presented however there are limitations associated with this, which could be stated. In equations 1,2 and 3 you should clearly state what the variables/initials used stand for. Are the data expressed in natural logarithms?

You manage to initially describe the sample in the results section. Regarding  correlation, please state which type you have used and you can further interpret the correlation coefficients apart from stating whether they are positive/negative and significant.

Preliminary analysis has been conducted prior to the logistic regression and there are also diagnostic tests applied. Overall results are explained well and in cases where differences exist from literature, possible reasons are provided.

Conclusion draws together the most important findings and policy implications are provided along with further research. However, you have not included any limitations that the work has regarding the data, the sources, the model and the period covered apart from the fact that results cannot be generalised.

Overall, nice work.

Author Response

Thank you very much for your invaluable comments and suggestions, which have improved the revised version significantly.

 

We would also like to send our appreciation to you for your time and efforts in reviewing our paper. We would like to thank you for your following comments:

• Is the content succinctly described and contextualized with respect to previous and present theoretical background and empirical research (if applicable) on the topic? (yes)   
• Is the article adequately referenced? (yes)
• The study explores the linkages between tax aggression and shared directors showing the rationale for this relation in the introduction.
• In the introduction, information is provided regarding the factors affecting tax aggressiveness and the aspects researchers focus on.
• Moreover, the relation between tax aggression and corporate governance variables is presented.
• The study's contribution is made clear to the reader in the introduction;
• Tax aggressiveness is explained in the literature part;
• Overall, the structure of the paper is evident to the reader, and
• the introduction is well constructed.
• Literature sets the scene for the analysis providing information related to the fact that connected firms may share tax-planning information because of managerial behaviour leading in turn firms to be tax-aggressive.
• The hypotheses are generated based on the literature and the writing extends beyond describing or summarising the literature.
• There is good evidence of synthesis and integration, and sufficient evidence is provided in the writing to support the argument(s) put forward.
• In the data and methodology section, data sources are presented
• You manage to initially describe the sample in the results section.
• Preliminary analysis has been conducted prior to the logistic regression and there are also diagnostic tests applied.
• Overall results are explained well and in cases where differences exist from literature, possible reasons are provided.
• Conclusion draws together the most important findings and policy implications are provided along with further research.
• Overall, nice work.

 

We would also like to send our appreciation to you for your time and efforts in reviewing our paper and for providing the excellent comments. Below are our responses to your helpful comments and suggestions.

 

Question 1. Are the research design, questions, hypotheses and methods clearly stated? (can be improved)

 

Answer 1:  Thank you very much for your advice. We have improved the research design, questions, hypotheses, and methods and stated clearly the contents in our revised manuscript.

 

Question 2. Are the arguments and discussion of findings coherent, balanced and compelling? (can be improved)

 

Answer 2:  Thank you very much for your advice. We have improved the arguments and discussion of findings coherent, balanced, and compelling of our paper in our revised manuscript.

 

Question 3. For empirical research, are the results clearly presented? (can be improved)

 

Answer 3:  Thank you very much for your advice. We have improved the presentation of the result of our empirical research in our revised manuscript.

 

Question 4. Are the conclusions thoroughly supported by the results presented in the article or referenced in secondary literature?  (must be improved)

 

Answer 4:  Thank you very much for your advice. We have improved the conclusions in our revised manuscript so that the conclusions thoroughly supported by the results presented in the article or referenced in secondary literature.

 

Question 5. the main findings are also presented to support this contribution (lines 114-125). I would expect these to be stated as 'aim' rather than conclusions derived from the empirical analysis

Answer 5:  Thank you very much for your advice. We have stated it as 'aim' rather than conclusions derived from the empirical analysis in our revised manuscript.

 

Question 6. Tax aggressiveness is explained in the literature part; however, the definition could be included in the introduction to make it easier perceived to the reader. Overall, the structure of the paper is evident to the reader, and the introduction is well constructed.

 

Answer 6:  Thank you very much for your advice. We have included the definition in the introduction to make it easier perceived to the reader in our revised manuscript.

 

Question 7. In the data and methodology section, data sources are presented however there are limitations associated with this, which could be stated. In equations 1,2 and 3 you should clearly state what the variables/initials used stand for. Are the data expressed in natural logarithms?

 

Answer 7:  Thank you very much for your advice. We have stated clearly in equations 1, 2, and 3 what the variables/initials used stand for and stated clearly whether the variables are expressed in natural logarithms in our revised manuscript.

 

Question 8. You manage to initially describe the sample in the results section. Regarding  correlation, please state which type you have used and you can further interpret the correlation coefficients apart from stating whether they are positive/negative and significant.

 

Answer 8:  Thank you very much for your advice. We have stated which type we have used and we have further interpreted the correlation coefficients in our revised manuscript.

 

Question 9: you have not included any limitations that the work has regarding the data, the sources, the model and the period covered apart from the fact that results cannot be generalised.

 

Answer 9:  Thank you very much for your advice. We have included the limitations that the work has regarding the data, the sources, the model and the period covered apart from the fact that results cannot be generalised in our revised manuscript.

 

We hope that you will find this manuscript suitable to be included in an upcoming issue of your publication.

Reviewer 2 Report

Overall, I think the paper is quite interesting.  But I have a few suggestions for improvement:

1. It is possible that the overlap in directors correlates with an overlap in the same lawyers.  Lawyers are likely the transmission mechanism for the findings here.  So I would encourage the authors to control for law firm in the analysis.
2. The US evidence is impacted by constituency statutes.  That is, there has been a change in respect of who managers owe a duty to - society at large, or just shareholders.  This duty affects tax strategies and earnings management.  See https://onlinelibrary.wiley.com/doi/abs/10.1111/eufm.12332?casa_token=Ah_AQeJIws4AAAAA:H7HsHWXjQNVkQUzwIrtQGQ6QNATRHg-KYcoTgoEK2c1I2PM3BgdSHDTHhBCH4DNmp8QncXgRT95RHrs
3. Related to point 2, who the firm owes a duty to will also affect Coercive Isomorphism.
4. In the write-up of the empirics, it would be more useful to explain the findings in terms of a 1-standard deviation change in the right hand variable instead of reporting the coefficient value in the text, and the percentage change it has on the dependent variable.
5. Another thing that could impact the findings here is the corporate culture.  I think it is worth mentioning, even if you do not have access to corporate culture data.  You could mention it as an avenue for future research, since for example other work has shown corporate culture affects other financial policies of firms such as Zhang, John F., 2022. "Cultural diversity and capital structures of multinational firms" Review of Corporate Finance 2(1), forthcoming.

I hope these comments help

Author Response

Thank you very much for your invaluable comments and suggestions, which have improved the revised version significantly.

 

We would also like to send our appreciation to you for your time and efforts in reviewing our paper. We would like to thank you for your following comments:

 

• English language and style are fine/minor spell check required
• Overall, I think the paper is quite interesting.

 

We would also like to send our appreciation to you for your time and efforts in reviewing our paper and for providing the excellent comments. Below are our responses to your helpful comments and suggestions.

 

Question 1. Is the content succinctly described and contextualized with respect to previous and present theoretical background and empirical research (if applicable) on the topic?           (can be improved)

 

Answer 1:  Thank you very much for your advice. We have succinctly described the content succinctly described and contextualized it with respect to the previous and present theoretical background and empirical research on the topic in our revised manuscript.

 

Question 2. Are the research design, questions, hypotheses and methods clearly stated? (can be improved)

 

Answer 2:  Thank you very much for your advice. We have improved the research design, questions, hypotheses, and methods and stated clearly the contents in our revised manuscript.

 

Question 3. Are the arguments and discussion of findings coherent, balanced and compelling? (can be improved)

 

Answer 3:  Thank you very much for your advice. We have improved the arguments and discussion of findings coherent, balanced and compelling of our paper in our revised manuscript.

 

Question 4. For empirical research, are the results clearly presented? (can be improved)

 

Answer 4:  Thank you very much for your advice. We have improved the presentation of the result of our empirical research in our revised manuscript.

 

Question 5. Is the article adequately referenced?  (must be improved)

 

Answer 5:  Thank you very much for your advice. We have improved the references in our revised manuscript so that our paper is adequately referenced.

 

Question 6. Are the conclusions thoroughly supported by the results presented in the article or referenced in secondary literature?  (must be improved)

 

Answer 6:  Thank you very much for your advice. We have improved the conclusions in our revised manuscript so that the conclusions thoroughly supported by the results presented in the article or referenced in secondary literature.

 

Question 7. English language and style are fine/minor spell check required

 

Answer 7:  Thank you very much for your advice. We have read and polished our paper carefully in our revised manuscript.

 

Question 8. It is possible that the overlap in directors correlates with an overlap in the same lawyers.  Lawyers are likely the transmission mechanism for the findings here.  So I would encourage the authors to control for law firm in the analysis.

 

Answer 8:  Thank you very much for your advice. Our sample does not include any single law firm or any auditor. We do not have such data.

 

Question 9. The US evidence is impacted by constituency statutes.  That is, there has been a change in respect of who managers owe a duty to - society at large, or just shareholders.  This duty affects tax strategies and earnings management.  

 

Answer 9:  Thank you very much for your advice and information. We have included this information with discussion in the conclusion our revised manuscript.

 

Question 10. Related to point 2, who the firm owes a duty to will also affect Coercive Isomorphism.

 

Answer 10:  Thank you very much for your advice and info. We have included this information with discussion in our revised manuscript.

 

Question 11. In the write-up of the empirics, it would be more useful to explain the findings in terms of a 1-standard deviation change in the right hand variable instead of reporting the coefficient value in the text, and the percentage change it has on the dependent variable.

 

Answer 11:  Thank you very much for your advice. We have explained the findings more in our revised manuscript.

 

Question 12. Another thing that could impact the findings here is the corporate culture.  I think it is worth mentioning, even if you do not have access to corporate culture data.  You could mention it as an avenue for future research, since for example other work has shown corporate culture affects other financial policies of firms such as Zhang, John F., 2022. "Cultural diversity and capital structures of multinational firms" Review of Corporate Finance 2(1), forthcoming.

 

Answer 12:  Thank you very much for your advice and information. We have cited the paper you recommended and discussed the issue in our revised manuscript.

 

We hope that you will find this manuscript suitable to be included in an upcoming issue of your publication.

 

Reviewer 3 Report

I admit that I have sympathetically inclined with the author(s)’ argumentation regarding the sustainability of tax aggressiveness. I think that the COVID-19 pandemic, as an exogenous shock, may imply important changes in tax aggressiveness.

a) I share the important role of knowledge in promoting sustainability in a variety of economic and social sectors. An interesting piece is G. Meramveliotakis and M. Manioudis (2021), “History, Knowledge, and Sustainable Economic Development: The Contribution of J.S. Mill’s Grand Stage Theory”, Sustainability, 13 (3) 1468 https://doi.org/10.3390/su13031468. Additional material may include S. Weiland (2016), “On the role of evidence and knowledge in Sustainability Governance-Towards a Reflexive Approach to Political Decision Making” Revue de métaphysique et de morale, 39-54 and M. Kordab, J. Raudeliūnienė and I. Meidutė-Kavaliauskienė (2020), “Mediating Role of Knowledge Management in the Relationship between Organisational Learning and Sustainable Organisational Performance”, Sustainability, 12 (23), 10061. Knowledge is a core element of the social structure and should be furtherly exemplified.

b) An important point that should be discussed (if there are available data) is the different levels in tax aggression as compared to firms’ size (small, medium, or large) and sector (retail trade, industry, tourism, etc.).

c) What is about digitalization? How this process would affect the sustainability of tax aggressiveness?

d) I believe that the conclusion and policy implications section should be furtherly elaborated to include how COVID-19 may change the situation.

To sum up, it is an interesting paper and I believe that revisions are necessary to enhance clarity.

Author Response

Thank you very much for your invaluable comments and suggestions, which have improved the revised version significantly.

 

We would also like to send our appreciation to you for your time and efforts in reviewing our paper. We would like to thank you for your following comments:

 

• Are the research design, questions, hypotheses and methods clearly stated? (yes) 
• Are the arguments and discussion of findings coherent, balanced and compelling? (yes) 
• For empirical research, are the results clearly presented? (yes)
• English language and style are fine
• it is an interesting paper

 

We would also like to send our appreciation to you for your time and efforts in reviewing our paper and for providing the excellent comments. Below are our responses to your helpful comments and suggestions.

 

Question 1. Is the content succinctly described and contextualized with respect to previous and present theoretical background and empirical research (if applicable) on the topic?           (can be improved)

 

Answer 1:  Thank you very much for your advice. We have succinctly described the content succinctly described and contextualized it with respect to the previous and present theoretical background and empirical research on the topic in our revised manuscript.

 

Question 2. Is the article adequately referenced?  (can be improved)

 

Answer 2:  Thank you very much for your advice. We have improved the references in our revised manuscript so that our paper is adequately referenced.

 

Question 3. Are the conclusions thoroughly supported by the results presented in the article or referenced in secondary literature?  (must be improved)

 

Answer 3:  Thank you very much for your advice. We have improved the conclusions in our revised manuscript so that the conclusions thoroughly supported by the results presented in the article or referenced in secondary literature.

 

Question 4. English language and style are fine/minor spell check required

 

Answer 4:  Thank you very much for your advice. We have read and polished our paper carefully in our revised manuscript.

 

Question 5. I admit that I have sympathetically inclined with the author(s)’ argumentation regarding the sustainability of tax aggressiveness. I think that the COVID-19 pandemic, as an exogenous shock, may imply important changes in tax aggressiveness.

 

Answer 5:  Thank you very much for your advice. We have addressed the issue in our revised manuscript.

 

 

 

We hope that you will find this manuscript suitable to be included in an upcoming issue of your publication.

Round 2

Reviewer 1 Report

Well done for considering the proposed changes.

All the best!

Author Response

Thank you very much for your invaluable comments and suggestions, which have improved the revised version significantly.

 

We would also like to send our appreciation to you for your time and efforts in reviewing our paper. We would like to thank you for your following comments:

• Is the content succinctly described and contextualized with respect to previous and present theoretical background and empirical research (if applicable) on the topic? (yes)   
• Are the research design, questions, hypotheses and methods clearly stated?(yes)
• Are the arguments and discussion of findings coherent, balanced and compelling? (yes)
• For empirical research, are the results clearly presented? (yes) 
• Is the article adequately referenced? (yes)
• I don't feel qualified to judge about the English language and style
• Are the results clearly presented? (Yes)
• Well done for considering the proposed changes.

 

We hope that you will find this manuscript suitable to be included in an upcoming issue of your publication.

Reviewer 2 Report

Thanks for replying to the prior comments in full.  Congratulations on an interesting paper.

Author Response

Thank you very much for your invaluable comments and suggestions, which have improved the revised version significantly.

 

We would also like to send our appreciation to you for your time and efforts in reviewing our paper. We would like to thank you for your following comments:

• Is the content succinctly described and contextualized with respect to previous and present theoretical background and empirical research (if applicable) on the topic? (yes)   
• Are the research design, questions, hypotheses and methods clearly stated?(yes)
• Are the arguments and discussion of findings coherent, balanced and compelling? (yes)
• For empirical research, are the results clearly presented? (yes) 
• Is the article adequately referenced? (yes)
• I don't feel qualified to judge about the English language and style
• Are the results clearly presented? (Yes)
• Thanks for replying to the prior comments in full. Congratulations on an interesting paper.

 

We hope that you will find this manuscript suitable to be included in an upcoming issue of your publication.