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Borsa Istanbul Review 16-3 (2016) 177e184
http://www.elsevier.com/journals/borsa-istanbul-review/2214-8450

Tax optimization and the firm's value: Evidence from the Tunisian context
Soufiene Assidi a,*, Khaoula Aliani b, Mohamed Ali Omri c
a
GEF2A, El Manar University, Tunisia
b
GEF2A, Business Department, College of Business Administration, PNU, Saudi Arabia
c
GEF2A, Faculty of Economics and Management, University of El Manar, Tunisia
Received 15 February 2016; revised 23 April 2016; accepted 23 April 2016
Available online 30 April 2016

Abstract

The paper investigated the relationship between corporate tax optimization and the firm's value in the Tunisian context over an 11 year period.
The empirical results revealed that tax optimization, accruals and investment increased the firm's value. After dividing the sample between listed
and non-listed firms, we concluded that, compared to non-listed firms, the listed firms were better able to optimize tax through adopting a tax
policy. Our findings help decision makers, researchers and practices to better understand the role of tax optimization in the management of firms
and, also, in their performance.
_
Copyright © 2016, Borsa Istanbul Anonim Şirketi. Production and hosting by Elsevier B.V. This is an open access article under the CC BY-NC-ND
license (http://creativecommons.org/licenses/by-nc-nd/4.0/).

JEL classification: H 25
Keywords: Firm value; Tax optimization; Listed and non-listed firms; Tunisia

1. Introduction growth led us to examine the relationship between tax opti-

mization and the firm's value.
The importance of taxation in management of firm is large The specific nature of the Tunisian tax system, with the
and growing. Alvarez and Marsal (2012) declare that tax many opportunities granted by the legislator, suggested that
topics are considered by financial executives in up to 92% of this context constituted a favourable ground for conducting
global business decisions. Recently, a great deal of effort has this study. In this framework, we identified tax optimization in
focused on the relationship between tax optimization and the terms of legal activity such as minimizing the taxable base for
firm's value. According to Capiez (1994) “tax optimization investment and financing.
consists in minimizing mainly the income tax in order to The main objective of tax optimization is the creation of the
maximize the result after taxes”. In the same way Bryant- firm's value and this is linked directly to both the planning and
Kutcher, Guenther, and Jackson (2012) show that tax optimi- the quality of the firm's managerial organization. Manager
zation interest managers to reduce tax burden and maximize look for strategies to reduce their tax burden to generate tax
level of profits. In this framework, we identified tax optimi- benefits after tax returns or shareholder wealth (Abdul Wahab
zation in terms of legal activity such as minimizing the taxable & Holland, 2012).
base for investment and financing. The interest granted to the There have been many debates about the practice of tax
firm's tax situation and the controversies concerning the firm's optimization and its impact on the firm's value. Chadefaux and
tax burdens (the tax rate is about 30% in Tunisia) and the firm's Rossignol (2006) considered that tax optimization was one of
the factors which were likely to increase the firm's value either
by the minimization of tax burdens or through the disclosure
* Corresponding author. of good information. Abdul Wahab and Holland (2012) reveal
E-mail address: [email protected] (S. Assidi).
_
Peer review under responsibility of Borsa Istanbul Anonim Şirketi.

http://dx.doi.org/10.1016/j.bir.2016.04.002
_
2214-8450/Copyright © 2016, Borsa Istanbul Anonim Şirketi. Production and hosting by Elsevier B.V. This is an open access article under the CC BY-NC-ND
license (http://creativecommons.org/licenses/by-nc-nd/4.0/).
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S. Assidi et al. / Borsa Istanbul Review 16-3 (2016) 177e184

a negative moderating influence of departing CEO on tax shareholders. They proposed the incorporation of the agency
optimization levels. theory in analyzing tax avoidance. They concluded that,
Nevertheless, some researchers found that the activity of amongst the retained theoretical framework, there were
tax optimization was perceived to have a destructive impact on considerable differences between theoretical and empirical
the firm's value (MacNaughton & Mawani, 1997; Nanik & results. As advocated by Slemrod (2004) and Desai and
Ratna, 2015). This was because, while tax optimization Dharmapala (2009), a simplified model with perfect agents
minimized the firm's tax burdens, it exposed the firm to (managers) entails distinct conclusions as compared to a
financial difficulties since no account was taken of the firm's model treating an agency theory.
non-tax costs. In the same context, they showed that the Desai and Dharmapala (2009) found that the effect of tax
optimization of the taxable income influenced the interests of avoidance on firm value depended on firm governance. They
other stakeholders. concluded that the global effect of tax avoidance was insig-
Hanlon and Heitzman (2010) showed that the relationship nificant and that it had a more positive effect on well-governed
between the activity of tax optimization and the firm's value firms than on poorly governed firms.
remained unclear. Although several studies have investigated In the context of the United Kingdom, Abdul Wahab and
the implication of tax avoidance on the firm's value, we still do Holland (2012) found that, regardless of the presence of
not understand fully the mechanisms underlying the associa- corporate governance mechanisms, there was a negative rela-
tion between tax avoidance and the firm's value. tionship between the intensity of tax planning and a firm's
In our research, we used the concept of value from the value. Desai and Dharmapala (2009) and Hanlon and Slemrod
shareholders' viewpoint. Our purpose was to investigate the (2009) demonstrated that firm characteristics played a crucial
relationship between the tax optimization and the creation of role in determining the influence of tax avoidance on the firm's
shareholder value. value. Koester (2011) considered that the governance structure
Previous research on the valuation of firms did not examine moderated the relationship between tax avoidance and the
clearly the empirical implications of the firm's value on tax firm's value.
avoidance activities. Therefore, the purpose of this study is to Previous studies on taxes and the firm's value assumed a
add to the growing literature on the implications of corporate linear relationship between tax planning and the market-to-
tax optimization on the firm's value in the context of a book ratio (De Simone & Stomberg, 2013). Jacob and
developing country such as Tunisia. Schütt (2014) studied two dimensions of tax avoidance such
This paper is organized as follows: in the first section, we as the uncertainty and the expected level of future tax rates.
present the literature review and, therefore, the hypotheses for They concluded that, for firms with effective tax avoidance,
our study. In the second section, we present the sample and the pre-tax earnings had a considerable impact on a firm's value. In
firms 'data. In the third section, we validate our hypotheses addition, firms, with volatile effective tax rates, received a
empirically. Finally, we present our conclusions. discount on their earnings.
In this study, we used Effective Tax Rates (ETRs) as a
2. Previous literature and development of hypotheses proxy of tax optimization.
Following the same line of thought as previous research, we
In this section, we examine the relevant literature on tax tested the following hypothesis:
optimization and the firm's value. Also, we explain the re-
lationships between firm value and earnings management, H1: There is a negative association between ETR and firm's
investment, financing, audit quality and size. value.

2.1. Tax optimization and the firm's value

2.2. Earnings management and the firm's value
The classic theoretical literature on firm valuation (Feltham
& Ohlson, 1995) and their empirical applications (Barth, Earnings management can be opportunistic or efficient; it
Clinch, & Shibano, 1999; Dechow, Hutton, & Sloan, 1998; relates to the manager's behaviour in using accounting
Kothari, 2001) used typically after-tax earnings and did not methods. Most previous researches concentrated on the
address any influences of corporate tax avoidance on firm opportunistic perspective and considered that earnings man-
value. agement was a way of wealth expropriation from shareholders
The taxpayers' behaviours vary from conscious tax plan- to managers. Therefore, opportunistic earnings management
ning, tax optimization and tax avoidance to tax evasion and tax might have a negative influence on the firm's performance
fraud; these represent illegal activities penalized by law (Alm, (Cormier & Martinez, 2006; Ettredge, Xu, & Yi, 2014; Louis
Cherry, Jones, & Mckee, 2010). More recent US research & White, 2006).
suggested further costs in the form of agency costs; these led Many researchers, such as Frank, Lynch, and Rego (2009)
shareholders to discount the firm value by reference to levels and Wilson (2009) in the American context, found that firms,
of tax planning activities (Desai & Dharmapala, 2006). which practised earnings management, realized simulta-
Desai and Dharmapala (2009) did not validate the simple neously an increase in their value. Frank et al. (2009) exam-
assumption of transfer of wealth from the state to ined the relationship between financial and tax reporting
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S. Assidi et al. / Borsa Istanbul Review 16-3 (2016) 177e184 179

aggressiveness after controlling for the incentives of tax H4: Investment has a positive influence on the firm's value.
planning and earnings management.
Managers may take advantages of the tax incentives gran-
ted by the law in order to reduce their accounting income. In 2.5. Audit quality
the Tunisian context, there is a connection between accounting
income and tax income. Therefore, taxable income can be The audit quality is a necessary element in guaranteeing the
reduced. Assidi and Omri (2014) showed that tax optimization relevance and reliability of the decision making process. The
could improve the information quality within the firm. In the auditors' affiliation to international BIG 4 firms plays an
same order of ideas, the traditional visions of tax optimization important role in the valorization of the firm. According to De
suggest that a firm's value should increase with the practice of Angelo (1981), BIG 4 firms offer better quality services
tax optimization. Therefore, we tested the following because they have competent and informed teams.
hypothesis: Sulong, Gardner, Hussin, Mohd Sanusi, and McGowan
(2013) revealed that audit quality had a significant and
H2: The firm's value increases if there is an increase in the negative impact on a firm's performance. The authors used the
sum of total accruals. sum of audit fees, paid to the auditors, as proxy of audit
quality. Their results were inconsistent with the findings of
previous studies which confirmed that audit quality was
2.3. Financial debt and the firm's value associated with higher performance. We highlight that the
retained measure of audit quality has a considerable differ-
The financial debt represents a major source of financing ential effect on the nature of the links between the variables in
for the firm. Modigliani and Miller (1963) presented the question.
seminal work which hypothesized that the tax benefits of debt The Tunisian firms are obliged to designate an auditor who
increased firm value and reduced the cost of using debt belongs to the Institute of Chartered Accountants; this ensures
capital. In the same order of ideas, the tax perspective con- the transparency of the published information.
siders that financial debt is a tax source of benefit to the firm. Bouaziz and Triki (2012) studied the audit committee's
Indeed, the interest, being fiscally deductible, allows the tax effect on financial performance in the Tunisian context. In
burdens to be minimized and to increase subsequently the particular, they underlined the audit committee's character-
firm's value. Based on the trade-off theory, Lim (2011) istics such as its independence, the members' expertise and
showed that there was a negative correlation between debt its size. Their findings showed that the audit committee's
and tax rates. attributes enhanced the performances of Tunisian listed
Financial debt equals financial debt divided by equity firms.
(Guenther, 1994). Therefore, we tested the following Many studies1 used Big 4 firms rather than Non-Big 4 firms
hypothesis: to approximate audit quality. Therefore, we tested the
following hypothesis:
H3: Debt has a negative effect on the firm's value.
H5: Audit quality has a positive effect on the firm's value.

2.4. Firm investment

2.6. Sector of activity
Investment is the fundamental source of firm value and of
economic growth. A stable environment helps a firm to invest. Belonging to a well determined sector, it can help the firm
Income taxes can play a significant role in the managers' to benefit from certain tax advantages and can influence, also,
decision-making concerning the investment. The amounts, the firm's value. Several researchers noted the importance of
report and, even, the uncertainty of the payment of tax burdens the sector of activity in increasing the firm's value
affect the calculation of the firm's net present value and, (Christopher, Armstronga, & Blouina, 2012; Janssen, Crabbe,
consequently, the decision on investment. Besides, tax in- & Vanenbussche, 2005; Omer, Molloy, & Ziebart, 1993;
centives can interact potentially with financial returns and can Zimmerman, 1983).
affect the firm's decisions on investments (Hanlon & From an empirical point of view, Omer et al. (1993)
Heitzman, 2010). In the Tunisian context, the state promul- detected a significant difference between firms in the indus-
gated the code of incentives and granted benefits to firms to trial sector and firms carrying out their activities in other
increase these values. Also, the firm's value is no longer in- sectors. Similarly, Janssen et al. (2005) concluded that effec-
dependent of factors which create corporate value. Indeed, tive tax rates varied between sectors. In addition, in the
Frank (2002) signalled that the economic circumstances, such Tunisian context, the tax benefits and the minimum amount of
as investment, played a considerable role in the determination tax depends on the firm's sector of activity. Indeed, we
of the firm's value. Therefore, we tested the following
hypothesis:
1
Bauwhede et al., 2000; Zhou & Elder, 2001.
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S. Assidi et al. / Borsa Istanbul Review 16-3 (2016) 177e184

assumed that the sector of activity might constitute a control required to submit to a particular tax regime such as income
factor on tax optimization. Therefore, we tested the following tax exemption.
hypothesis:
3.2. Dependent variable
H6: The firm's value depends on the sector of activity.
3.2.1. Firm value
The literature recommended several measurement in-
2.7. Firm size struments such as accounting measures, namely, Return on
Assets (ROA) and Return on Equity (ROE) and Stock Ex-
Previous empirical research studies found that there was a change measures (Q of Tobin value).
positive relationship between firm size and corporate perfor- In this study, we measured firm value by using ROA; this
mance (Hanlon & Slemrod, 2009). In contrast, in the Amer- was calculated by the net profit on the total assets. Notably, in
ican context, Kim and Limpaphayom (1998) confirmed the the American context, Dodd and Chen (1996) showed that
existence of a negative relationship between the firm's size and ROA was the most efficient measure of the firm's value. Also,
the firm's value. Several previous works indicated that the total this measure has a relationship between tax benefits accorded
assets could be considered to be an indicator of the firm's size by the state and corporate assets which represent factors of the
(Zhou, 1999; Zimmerman, 1983). creation of value. This ratio also represents companies' prof-
In conducting our research, we referred to the works of itability level from their business transaction activities
Wilson (2008) who measured the firm's size by the natural (Santoro & Wei, 2011).
logarithm of the book value of total assets. The econometric In the following, we present a brief description of the
transformation to the logarithm allowed us to avoid the explanatory variables used in our research.
problem of stationary of the variables. Since large size firms
are subject to larger transfers of wealth, we anticipated that, 3.3. Independent variables
for the Tunisian firms, the firm's size increased the firm's value.
Next, we tested the following hypothesis: Effective Tax Rate (ETR): tax income divided by income
before taxes. Several recent pieces of research (e.g. Aliani,
H7: Size has a significant and positive effect on the firm's 2014; Dyreng, Hanlon, & Maydew, 2010; Wilson, 2009)
value. used this measure as a proxy of tax minimization activities.
Total accruals: equal the difference between the firm's
3. Methodology income and cash flow.
Financial debt: financial debt divided by equity (Guenther,
In this section, we present our data and the sample selection 1994).
of our research along with the dependent variables and in- Investment: gross change in tangible assets (Tang & Firth,
dependents variables. Likewise, we present the model, the 2010).
descriptive analysis, the statistical tests and the results of the
estimations. 3.4. Control variables

3.1. Data and selection of sample BIG: 1 if the firm is audited by a Big Four company and
0 otherwise (Bouaziz & Triki, 2012).
Our empirical study covered a sample of Tunisian firms SECTOR: 1 if the firm belongs to the industrial sector and
over an 11 year period. We began with a sample of all 0 otherwise (Christopher et al., 2012).
Tunisian listed and non-listed firms during the years from SIZE: logarithm of the book value of total assets (Wilson,
2000 to 2010. We chose these eleven years because they 2008)
represented the most recent years for which financial state-
ment data were currently available. For the listed firms, we
collected the data from the financial statements and the stock 3.5. Model presentation
market data published by the financial market council.
However for non-listed firms, we collected the data from the In accordance with the micro-economic and classical
accounting services of the firm itself. We excluded firms financial theory, we found that firm performance was valorized
belonging to the financial sector (such as banking, insurance by managerial choice. Therefore, tax optimization was a
and investment firms) and real estate firms because of their means of creating value by applying all available means and
accounting and tax specificities. Indeed, these firms are strategies. We developed the following model to present the
required to submit to sectorial standards techniques whereby relationship between tax optimization and the firm's value:
the financial accounting techniques are different from those
other industrial, commercial and services firms. We excluded, ROAit ¼ a0 þ b1 ETRit þ b2 ACCTit þ b3 DEBTit þ b4 DINVit
also, the firms, which exported totally, because they were þ b5 BIGit þ b6 SECTORit þ b7 SIZEit þ 3it
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S. Assidi et al. / Borsa Istanbul Review 16-3 (2016) 177e184 181

We applied this model on unbalanced panel data for a Table 3

sample composed of 385 observations (35 firms). Correlation matrix.
ETR ACC DEB INV SECT SIZ BIG
3.6. Descriptive analysis ETR 1.00
ACC 0.23 1.00
From Table 1, we found that, in our sample, the average DEB 0.04 0.13 1.00
INV 0.01 0.05 0.06 1.00
effective tax rate was 21.1%. This percentage was below the SEC 0.03 0.05 0.09 0.04 1.00
Tunisian statutory tax rate (30%). In fact, we considered that SIZ 0.009 0.13 0.17 0.14 0.39 1.00
the average performance of tax optimization of Tunisian firms BIG 0.09 0.07 0.09 0.06 0.19 0.31 1.00
was significant.
As regards the variable earnings management, we found
that 2.8% of the firms managed their earnings; this explained Table 4
Hausman test.
the relationship between the earnings management and the
firm's value. Coefficients Difference Standard error
For the financial debt, we noted that this was, on average, ETR 0.111 0.070 0.040 e
55%; this showed that the Tunisian firms had significant levels DET 0.404 0.512 0.107 0.034
INV 0.007 0.004 0.002 e
of debt which minimized their values. Indeed, the average of
BIG 0.123 0.265 0.141 0.161
the corporate investment was of the order of 2.69%; this ACC 0.19 0 0.160 0.024 0.003
showed that investment and tax benefits increased the firm's SIZ 1.274 1.294 0.019 0.042
value. The variable size generated an average of 81.91%. This Prob ¼ 0.002
value suggested that the Tunisian firms, selected in our sam-
ple, were large in size; this played a role in the firm's value.
In Table 1 below, we show the descriptive statistics of our Table 5
Estimation results.
variables.
As shown in Table 2, the results indicate that 62.06% of Independent variables Coefficients Z P
firms belonged to the industrial sector. This demonstrated the ETR 0.015 4.12 0.000
importance of this sector to Tunisian economic life and the ACC 0.019 11.07 0.000
DET 0.017 4.08 0.000
weight of the tax placed on the industrial firms. The frequency INV 0.005 2.18 0.030
of commercial and services firms were 20.69% and 17.25% BIG 0.002 0.23 0.819
respectively. This led us to conclude that the value of the SEC 0.073 3.32 0.000
SIZ 0.018 5.99 0.000
Table 1 CONSTANT 1.175 20.37 0.000
Prob > F ¼ 0.000
Panel A: Variable definitions
Variables Definition Measures
ETR Effective tax rate Income tax/profit before tax
Accruals Total accruals Net income e cash flow industrial firms was more important than that of commercial
Size Total assets Log total assets and services firms.
DINV Change in property Gross change in tangible assets According to Table 2, our sample shows a frequency of
DEBT Debt Financial debt/equity 43.89%. This result explains that almost half of the studied
AUDIT Audit 1 if the firm is audited by a
firms were not audited by the BIG 4; this raised the problem of
Big Four company and 0 otherwise
SECTOR Sector of activity 1 industry 0 otherwise the relationship between the BIG 4 and firm value.
As presented in Table 3, the correlation matrix of the
Panel B: Descriptive statistics of quantitative variables
explanatory variables shows that there is a moderate correla-
Minimum Maximum Mean Standard error
tion of the variables. We noted the absence of strong corre-
Effective tax rate 0.000 0.431 0.218 1.480 lations which might bias our results. We verified, also, the
Accruals 7.829 10.080 0.028 2.174
degree of correlation between the ETR and the accruals on the
Debt 0.990 4.120 0.553 2.127
Investment 5.730 3.190 1.922 12.059 one hand and, on the other hand, between the ETR and the
Size 13.94 21.01 8.190 9.050 other variables. This was because a strong correlation between
the variables could influence the nature of the relationship
Table 2 between the firm's value, as measured by the economic prof-
Frequency table. itability, and the other variables.
Frequency
Sector of activity Industrial 62.06%
3.7. Statistical tests and results of estimations
Commercial 20.69%
Service 17.25% The Hausman test result (Table 4) shows that the likelihood
Audit quality BIG 43.89% is 0.00 per cent which is less than 5%. Therefore, this statistic
NBIG 56.10% allowed us to choose the fixed effect model.
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From Table 5, we interpreted the correlation between the Table 6

independent and dependents variables of our model. The Estimation results after decomposing the sample.
effective tax rate correlated negatively and significantly with Variables Listed firms Non-listed firms
the firm's economic profitability. This shows that the minimi- Coefficient Z P Coefficient Z P
zation of the tax rate has a direct impact on the firm's profit- ETR 0.013 4.48 0.00 0.213 4.48 0.00
ability. This result corroborated both Desai and Dharmapala's ACC 0.014 9.31 0.00 0.021 3.75 0.001
(2009) work and confirmed our theoretical hypothesis. DEB 0.017 3.77 0.00 0.012 1.52 0.13
Despite, the different context the minimization of tax burden INV 0.004 0.16 0.87 0.005 0.04 0.30
BIG 0.002 0.32 0.75 e e e
remains ultimate objective for all company in word. Then, in SEC 0.038 3.20 0.00 0.51 1.54 0.13
making their decisions, managers have to take account of the SIZ 0.005 1.41 0.15 0.02 4.71 0.00
after tax consequences. CONS 0.95 14.23 0.00 1.16 13.55 0.00
In our sample, the coefficient of the accruals variable is Prob > F ¼ 0.000 Prob > F ¼ 0.000
positive and statistically significant. It followed that most of
manager used earnings management upwards for different
objectives. In our context, the firms had a high concentration
of ownership. In fact, in the American context, Warfield, because the publicly traded firms were more exposed to
Wild, and Wild (1995) proved, also, this positive relation- different cyclical phenomena which affected their market
ship between the firm's economic value and the firm's earn- prices.
ings management. This result confirm in the majority of all According to Table 6, the coefficient of the effective tax
context because manager every time look for personnel rate of listed firms is significant and negative. This coefficient
wealth. is more important than the coefficient of non-listed firms. This
The investment had an immediate effect on the value for a can be explained by these firms' abilities to optimize their tax
coefficient of 0.05. It was considered to be an investment policies in order to maximize their values. The listed firms are
oriented towards the productive or the material yield. The subject to the regulatory constraints and controls which are the
investment is correlated positively with economic profitability. responsibility of their managers. Consequently, the non-listed
Therefore, it represented a factor in the creation of value and firms are less liable to have the opportunities of tax optimi-
the extension and development of firms. This might be zations due to the absence of the strict application of the tax
explained by the socio-politic stability, favourable environ- rules and the absence of professionals able to optimize the tax
ment for investment and low risk. burdens. In addition, the estimation results showed that the
The coefficient of the debt variable is negative and statis- debt was the variable; this allowed the listed firms to better
tically significant, this result confirm with Hovakimian (2006). achieve tax optimization since, compared to non-listed firms,
It is the short-term debt rather than the investment cycle which they had more chances to access debt.
was intended to finance the operating cycles or the banking The sector of activity was significant for the publicly traded
competition. Consequently, it has a negative effect on eco- firms whereas it was insignificant for the non-listed firms. In
nomic profitability because of the importance of the financial effect, the industrial listed firms created better value than other
charge. Also, the firm used short-term debts to compensate for sectors.
the financial disequilibrium. In effect, when there was favourable financial leverage, a
The sector variable was significant and this validated our part of the firm's generated value was transferred to the State in
hypothesis. The choice of sector of activity is a necessary the form of tax. On the other hand, in the presence of negative
element which helps the firm to create value (Christopher financial leverage, the State takes on a part of the burden since
et al., 2012). the financial losses of the exercises were deferred to the
The industrial sector creates better value than firms in the following fiscal year.
other sectors. This result explains by the benefits and in-
centives which the State allowed the industrial sector. 4. Conclusion
The coefficient of the size variable is positive and statisti-
cally significant; this validated our hypothesis. This raised the The main interest of this work is to examine the relation-
problem of increasing return to scale. In our sample, there ship between tax optimization and the firm's value. Specif-
were social problems such as the large wage bills. The Tuni- ically, we underlined the factors, which could be related
sian firms were inefficient since they did not have the econ- intimately to effective tax rates and influenced the firm's value.
omies of scale. We stressed the audit quality, earnings management, debt,
In order to determine the effect of the Stock Exchange sector of activity. To demonstrate such an effect, we used a
listing on firm value, we split our sample into two separate sample of Tunisian listed and non-listed firms for a period
sub-samples (24 firms listed and 11 firms non-listed). The first from 2000 to 2010.
one included the listed firms and the second contained the The results showed that there was a negative relationship
listed firms. The Hausman test revealed that the listed firms between corporate tax optimization and firm value for Tunisia
had a random effect, whilst, on the other hand, those unlisted firms. This shows that the minimization of the tax rate had a
displayed a fixed effect. The logic of this result was likely direct impact on the firm's profitability.
 _
S. Assidi et al. / Borsa Istanbul Review 16-3 (2016) 177e184 183

In addition, since the managers were looking to smooth out Desai, M., & Dharmapala, D. (2006). Corporate tax avoidance and high-
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