Ownership structure on tax avoidance: Evidence from listed firms in Vietnam

Abstract

This study examines how different types of ownership structures affect the tax avoidance of listed firms in Vietnam, based on agency theory and legitimacy theory. Using panel data from 359 firms over the period 2013–2022, the study applies the Feasible Generalized Least Squares (FGLS) method and the Two-Stage Least Squares (2SLS) approach to address potential endogeneity issues. The findings indicate that managerial ownership has a positive influence on tax avoidance, while institutional and foreign ownership have a negative impact on tax avoidance. These results are consistent with theoretical perspectives, emphasizing that agency problems can be resolved and balance the interests of relevant stakeholders. The study offers valuable insights for authorities and management in addressing tax avoidance issues, providing crucial information to develop policies aimed at limiting and preventing revenue loss to the state budget, especially in emerging markets such as Vietnam. Additionally, business management needs to consider tax avoidance behaviors to benefit the company or shareholders. Finally, the study enhances understanding of ownership effects within the agency theory framework and provides more convincing results by addressing the limitations of previous studies related to endogeneity testing.