planification definition
Obviously, there can be no question of deducing from this single example a permanent and general link between tax planning and embezzlement of profits; it is also necessary to refer to the work of Desai and Dharmapala (2006) who endeavored to demonstrate the existence of such a relationship. To this end, the latter established a negative correlation between incentive compensation for managers – supposed to align the interests of management with those of shareholders – and the level of tax planning. Their study shows that an increase in the share of stock-based compensation – in particular through the allocation of stock options and shares – in the total compensation of managers leads to a reduction in the gap “ residual” between the accounting result and the taxable income [2]planification fiscale [2] Measuring tax planning through the gap between…, used as a measure of tax planning. According to the authors, this relationship reveals the interdependence that unites tax planning and profit diversion; since the establishment of an incentive structure aimed at aligning the interests of shareholders and managers leads to a reduction in tax planning, it is a good thing that this often forms the basis of opportunistic behavior by management. However, Desai and Dharmapala point out that the correlation their work finds holds true only in cases where corporate governance is weak – that is, when the shareholder base is unable to exercise effective control over managers. 11As soon as tax planning is likely to be used for purposes potentially unfavorable to shareholders, the latter have no interest in encouraging it but rather in protecting themselves from it. In this regard, a study conducted by Chen et al.(2010) on tax planning in family businesses – i.e. those in which members of the founding family continue to occupy key management positions, are present on the board of directors or are dominant shareholders – put forward the conclusions of a special interest. Based on 3,865 firm-year observations relating to 1,003 firms included in the composition of the American stock market index S P 1,500 during the period 1996-2000, the authors were able to show that family firms presented a lower propensity to resort to tax planning – apprehended in terms of the effective tax rate and the difference between accounting profit and taxable income – than other firms.