Tax Compliance, Trust Capital, and Firm Value in an Emerging Market: Evidence from Vietnamese Listed Financial Institutions

In the digital era, tax compliance served as crucial capital. This study examines the impact of tax compliance, proxied by the effective tax rate (ETR) and validated by book–tax differences (BTD) as an alternative proxy, on the firm value of listed financial institutions in Vietnam from 2018 to 2023. Utilizing a comprehensive panel dataset of 29 listed financial firms, the empirical estimations explore a Fixed Effects Model (FEM) with Driscoll–Kraay robust standard errors to control for heteroscedasticity, autocorrelation, and cross-sectional dependence. The empirical results reveal a statistically significant positive relationship between current-period tax compliance and firm value, supporting Signaling Theory and Stewardship Theory by demonstrating that the market awards a governance premium for tax transparency. Conversely, the prior-period tax compliance exerts a significant negative impact on current valuation, validating the existence of a tax-induced liquidity drain. Under the Information Processing Theory, a legacy of robust tax compliance is conceptually argued to be transformed into a digital credit asset in the digital age. This intangible asset enables financial institutions to seamlessly navigate stringent risk screenings, secure swift access to data-driven supply chain finance systems and effectively resolve short-term cash flow bottlenecks to sustain long-term value growth. Furthermore, firm valuation is significantly shaped by key institutional control parameters. Specifically, chronological firm longevity exerts a statistically significant positive impact on market value, highlighting the pricing of historical resilience, while core accounting profitability remains positive but statistically neutral in the baseline specification. Conversely, traditional revenue expansion scale is negatively valued, signaling market skepticism toward asset-heavy, physical scaling in the digital financial era.