Unlocking the Growth-Value Puzzle: The Strategic Role of Tax Planning in Value Creation in the Thai Capital Market
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Abstract
This study examines the effect of sales growth on firm value, emphasizing the moderating role of tax planning within the frameworks of agency theory and the resource-based view. Using firm-level data from the SETSMART database, comprising 1,840 firm-year observations from companies listed on the Stock Exchange of Thailand, the study investigates how growth and tax strategy jointly shape firm valuation. The findings challenge the traditional belief that firm growth automatically enhances firm value. The results indicate that growth alone is insufficient for value creation; in the absence of effective strategic management and governance, growth may lead to operational risks, overinvestment, or agency conflicts that erode firm value. When tax planning is introduced as a moderating factor, its dual role becomes evident. Well-designed, transparent, and well-governed tax planning enhances financial flexibility, preserves cash flows, and enables firms to convert sales growth into sustainable economic value. In contrast, aggressive or poorly governed tax practices may be perceived as risky or opportunistic, weakening the value implications of growth and leading to lower firm valuation. Overall, the study highlights that the quality of growth matters more than its quantity, and that this quality is critically shaped by tax strategy and corporate governance mechanisms. The findings suggest that sustainable firm value in the Thai capital market depends not only on how much firms grow, but also on how effectively that growth is managed, financed, and governed.
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