Rethinking the corporate tax base. Evidence of the relationships between cash flow and net income
This study examines how the operating cash flow net of cash from investing activities (CFINV) is correlated with the net income for a sample of 189 Italian listed firms from 2011 to 2015. Research findings revealed three main results. First, firms that have a positive amount of CFINV greater than the amount of net income are unprofitable and levered. Second, CFINV is positively affected by firm profitability, efficiency and leverage. Third, the corporate tax burden is positively affected by firm profitability and efficiency, but negatively influenced by leverage.