FINANCIAL CONSTRAINT AND LEVEL OF TAXATION ON PROFIT IN THE STAGES OF THE ORGANIZATIONAL LIFE CYCLE OF BRAZILIAN COMPANIES

Abstract

The objective of this study was to analyze the influence of financial restriction on the level of taxation on the profit of Brazilian companies, considering the stages of the organizational life cycle, between 2011 and 2020. Using panel data with fixed and random effects, the study employed different effective tax burden proxies, such as Total ETR, Current ETR, and Differential ETR, to capture nuances in companies' tax practices. The results revealed that the financial constraint, analyzed in isolation, did not present statistical significance in relation to the effective tax burden metrics. This suggests that, in the Brazilian context, the relationship between financial constraint and fiscal practices is mediated by other factors, such as the stages of the organizational life cycle. Companies in the maturity stage stood out, presenting lower Differential ETR and higher Current ETR, reflecting a more conservative fiscal behavior, consistent with the literature that associates financial stability and reputation with less aggressive practices. On the other hand, companies in the nascent stages, although facing greater financial challenges, demonstrated less aggressive tax practices in situations of financial constraint, probably due to the limitation of managerial resources. Important contributions include the integration of financial constraint and organizational life cycle analyses, providing new perspectives on fiscal behavior in emerging economies. The practical implications involve the adjustment of tax strategies to each organizational stage and the need for tax policies that meet the specificities of companies. As limitations, the lack of qualitative data on specific tax strategies and the exclusion of small companies stand out. Future research can explore these gaps, as well as the impacts of economic shocks and institutional factors on the relationship between financial constraint and fiscal practices.

DOI: https://doi.org/10.56238/sevened2024.031-090