Corporate tax-mix and firm performance. A comprehensive assessment for Romanian listed companies

The paper investigates the impact of overall firm-specific tax-mix on firm performance for Romanian listed companies during the 2000–2011 period. By overall tax-mix, we mean all public finance-related liabilities borne by a company, thus including not only profit taxes, but also non-profit taxes (i.e., real-estate taxes) and labour-related taxes (social security charges borne by companies). Developed around the corresponding tax wedge, the variable of interest is a firm-specific effective tax rate that aggregates all public finance liabilities, based on a unique set of hand-collected data from publicly available corporate reports. Using a fixed-effect model, the results show that one percentage point increase in overall firm-specific tax rate triggers 0.15 percentage points decrease in return on assets. Moreover, tangibles, leverage and size have a negative effect on Romanian listed companies’ performance, while liquidity, growth and lagged profitability have a positive effect.