This study evaluates taxpayer morale through the perception of accounting professionals, specifically whether there is an impact from i) penalties, ii) tax audit probability, iii) rewards, and iv) tax amnesties. A perception survey with accountants is more reliable than with the taxpayers because they tend to report accurate perceptions, knowing close the degree of tax morale of their clients. Based on the literature, it is observed that taxpayer behavior has been analyzed by the rational economic model and the so-called crime paradigm, which relied on the idea that taxpayers would be potential offenders, aiming only at advantages. With a multidisciplinary approach with a sociological and psychological perspective, tax morale was measured through a self-applied questionnaire, showing higher or lower accountants' perception on tax morale of taxpayers concerning the incentives analyzed captured from 344 Brazilian accountants. The research findings indicate that the application of punishments and penalties are the most potent instruments for raising tax compliance, along with the perceived likelihood of an audit. In contrast, the successive application of tax amnesty programs erodes tax morale. This research is relevant because it deepens the understanding of what legislators and tax administration can do or not do to encourage greater tax morale.
{"title":"Tax Morale as Perceived by Accounting Professionals","authors":"Antonio Lopo Martinez, Ivan R. F. Pereira","doi":"10.2139/ssrn.3855177","DOIUrl":"https://doi.org/10.2139/ssrn.3855177","url":null,"abstract":"This study evaluates taxpayer morale through the perception of accounting professionals, specifically whether there is an impact from i) penalties, ii) tax audit probability, iii) rewards, and iv) tax amnesties. A perception survey with accountants is more reliable than with the taxpayers because they tend to report accurate perceptions, knowing close the degree of tax morale of their clients. Based on the literature, it is observed that taxpayer behavior has been analyzed by the rational economic model and the so-called crime paradigm, which relied on the idea that taxpayers would be potential offenders, aiming only at advantages. With a multidisciplinary approach with a sociological and psychological perspective, tax morale was measured through a self-applied questionnaire, showing higher or lower accountants' perception on tax morale of taxpayers concerning the incentives analyzed captured from 344 Brazilian accountants. The research findings indicate that the application of punishments and penalties are the most potent instruments for raising tax compliance, along with the perceived likelihood of an audit. In contrast, the successive application of tax amnesty programs erodes tax morale. This research is relevant because it deepens the understanding of what legislators and tax administration can do or not do to encourage greater tax morale.","PeriodicalId":22313,"journal":{"name":"Tax eJournal","volume":"10 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-05-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"83162985","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Using the mandatory disclosure of detected corporate tax evasion cases in China, we examine the types of publicly listed firms that evade taxes. We use a bivariate probit model to account for the partial observability of tax evasion. Our regression results are different from those using the reduced form probit model that ignores the partial observability of tax evasion. Our results are also different from those of prior research on the determinants of corporate tax avoidance using the effective tax rate (ETR) as a proxy for tax avoidance, suggesting that ETR may not be a good proxy for aggressive tax avoidance.
{"title":"Government Ownership and Corporate Tax Evasion: Evidence from China","authors":"Travis Chow, B. Ke, Hongqi Yuan, Yao Zhang","doi":"10.2139/ssrn.3160421","DOIUrl":"https://doi.org/10.2139/ssrn.3160421","url":null,"abstract":"Using the mandatory disclosure of detected corporate tax evasion cases in China, we examine the types of publicly listed firms that evade taxes. We use a bivariate probit model to account for the partial observability of tax evasion. Our regression results are different from those using the reduced form probit model that ignores the partial observability of tax evasion. Our results are also different from those of prior research on the determinants of corporate tax avoidance using the effective tax rate (ETR) as a proxy for tax avoidance, suggesting that ETR may not be a good proxy for aggressive tax avoidance.","PeriodicalId":22313,"journal":{"name":"Tax eJournal","volume":"82 4 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-05-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"76067923","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper studies the implications of monopsony power for optimal income taxation and welfare. Firms observe workers' abilities while the government does not and monopsony power determines what share of the labor market surplus is translated into profits. Monopsony power increases the tax incidence that falls on firms. This makes labor income taxes less (more) effective in redistributing labor income (profits). The optimal tax schedule is less progressive. Monopsony power alleviates the equity-efficiency trade-off that occurs because the government does not observe ability, but at the expense of exacerbating capital income inequality. I illustrate these findings for the US economy.
{"title":"Monopsony power, income taxation and welfare","authors":"A. Hummel","doi":"10.2139/ssrn.3860739","DOIUrl":"https://doi.org/10.2139/ssrn.3860739","url":null,"abstract":"This paper studies the implications of monopsony power for optimal income taxation and welfare. Firms observe workers' abilities while the government does not and monopsony power determines what share of the labor market surplus is translated into profits. Monopsony power increases the tax incidence that falls on firms. This makes labor income taxes less (more) effective in redistributing labor income (profits). The optimal tax schedule is less progressive. Monopsony power alleviates the equity-efficiency trade-off that occurs because the government does not observe ability, but at the expense of exacerbating capital income inequality. I illustrate these findings for the US economy. <br>","PeriodicalId":22313,"journal":{"name":"Tax eJournal","volume":"27 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-05-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"81734293","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Analysts regularly issue ETR forecasts that meaningfully deviate from managers’ voluntary annual effective tax rate (ETR) forecasts. I examine whether these deviations impact analyst forecast accuracy. Comparing analyst forecasts that deviate to analyst forecasts that reiterate managers’ ETR forecasts in a firm-year fixed effects regression, I find that deviating analysts issue less accurate after-tax earnings, pretax earnings, and ETR forecasts. Further, the inaccurate deviating analyst ETR forecasts appear to be mainly caused by differences about tax forecasts rather than pretax earnings forecasts. Analysts are more likely to deviate from managers’ ETR forecasts when they have less firm forecasting experience, issue forecasts later in the period, follow more industries, and issue fewer forecasts for the firm. Overall, the results suggest that analysts lack tax information to improve on managers’ voluntary ETR forecasts.
{"title":"Analyst Forecast Accuracy when Deviating from Manager’s Voluntary Annual Effective Tax Rate Forecast","authors":"Colin Koutney","doi":"10.2139/ssrn.3259579","DOIUrl":"https://doi.org/10.2139/ssrn.3259579","url":null,"abstract":"Analysts regularly issue ETR forecasts that meaningfully deviate from managers’ voluntary annual effective tax rate (ETR) forecasts. I examine whether these deviations impact analyst forecast accuracy. Comparing analyst forecasts that deviate to analyst forecasts that reiterate managers’ ETR forecasts in a firm-year fixed effects regression, I find that deviating analysts issue less accurate after-tax earnings, pretax earnings, and ETR forecasts. Further, the inaccurate deviating analyst ETR forecasts appear to be mainly caused by differences about tax forecasts rather than pretax earnings forecasts. Analysts are more likely to deviate from managers’ ETR forecasts when they have less firm forecasting experience, issue forecasts later in the period, follow more industries, and issue fewer forecasts for the firm. Overall, the results suggest that analysts lack tax information to improve on managers’ voluntary ETR forecasts.","PeriodicalId":22313,"journal":{"name":"Tax eJournal","volume":"65 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"84752703","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We examine whether economic incentive awards by U.S. state governments to corporations are affected by political connections, and importantly whether a relation is cause for constituent concern. Consistent with findings examining international and U.S. federal-level political connections, we find that U.S. state governments also allocate resources disproportionally to politically connected firms. A firm is nearly four times more likely to receive an award, and the award is 63 percent larger, when the firm makes campaign contributions to state politicians. To determine if this relation distorts or enhances government resource allocation effectiveness, we focus on three key stakeholders: politicians, taxpayers, and shareholders. The positive relation between incentive awards and political connections is stronger when politicians’ motives appear self-serving. Although the stock market reacts more positively to connected award announcements, these awards generate less local job growth and less aggregate local economic growth, suggesting a wealth transfer from taxpayers to connected firm shareholders. Consistent with this interpretation, connected firms commit to fewer jobs and less capital investment per dollar of incentive awarded. In sum, state governments disproportionately award incentives to politically connected firms, even though these awards are a less effective allocation of government resources. Our study thus identifies a channel through which politicians can transfer rents to connected corporations at the expense of local taxpayers.
{"title":"The politics of government resource allocation: Evidence from U.S. state government awarded economic incentives","authors":"Daniel Aobdia, Allison Koester, R. Petacchi","doi":"10.2139/ssrn.3127038","DOIUrl":"https://doi.org/10.2139/ssrn.3127038","url":null,"abstract":"We examine whether economic incentive awards by U.S. state governments to corporations are affected by political connections, and importantly whether a relation is cause for constituent concern. Consistent with findings examining international and U.S. federal-level political connections, we find that U.S. state governments also allocate resources disproportionally to politically connected firms. A firm is nearly four times more likely to receive an award, and the award is 63 percent larger, when the firm makes campaign contributions to state politicians. To determine if this relation distorts or enhances government resource allocation effectiveness, we focus on three key stakeholders: politicians, taxpayers, and shareholders. The positive relation between incentive awards and political connections is stronger when politicians’ motives appear self-serving. Although the stock market reacts more positively to connected award announcements, these awards generate less local job growth and less aggregate local economic growth, suggesting a wealth transfer from taxpayers to connected firm shareholders. Consistent with this interpretation, connected firms commit to fewer jobs and less capital investment per dollar of incentive awarded. In sum, state governments disproportionately award incentives to politically connected firms, even though these awards are a less effective allocation of government resources. Our study thus identifies a channel through which politicians can transfer rents to connected corporations at the expense of local taxpayers.","PeriodicalId":22313,"journal":{"name":"Tax eJournal","volume":"7 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-01-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"84400917","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We examine the capital market reaction to the announcement of the European Union (EU) to introduce a public tax country-by-country reporting (CbCR) regime. By employing an event study methodology, we find a significant cumulative average abnormal return (CAAR) of -0.699%, which translates into a monetary value drop of approximately EUR 65 billion. We conclude that investors evaluate reputational risks arising from public scrutiny and competitive disadvantages to outweigh potential benefits of an extended information environment or more sustainable corporate tax strategies. In cross-sectional tests, we find that the average investor reaction is more pronounced for firms with low effective book tax rates, indicating that reputational concerns play a significant role in the marginal investor's investment behavior. Furthermore, our cross-sectional results indicate that the market reaction is stronger for firms operating in industries with high growth in market participants, providing an initial indication for the role of the competitive environment as an additional channel. Our inferences are of particular importance in light of the current ongoing debates on similar disclosure rules (particularly in the United States; cf. "Disclosure of Tax Havens and Offshoring Act") as well as for sustainability standard setters.
{"title":"How Do Investors Value the Publication of Tax Information? Evidence From the European Public Country-By-Country Reporting","authors":"Raphael Müller, Christoph Spengel, Stefan Weck","doi":"10.2139/ssrn.3949860","DOIUrl":"https://doi.org/10.2139/ssrn.3949860","url":null,"abstract":"We examine the capital market reaction to the announcement of the European Union (EU) to introduce a public tax country-by-country reporting (CbCR) regime. By employing an event study methodology, we find a significant cumulative average abnormal return (CAAR) of -0.699%, which translates into a monetary value drop of approximately EUR 65 billion. We conclude that investors evaluate reputational risks arising from public scrutiny and competitive disadvantages to outweigh potential benefits of an extended information environment or more sustainable corporate tax strategies. In cross-sectional tests, we find that the average investor reaction is more pronounced for firms with low effective book tax rates, indicating that reputational concerns play a significant role in the marginal investor's investment behavior. Furthermore, our cross-sectional results indicate that the market reaction is stronger for firms operating in industries with high growth in market participants, providing an initial indication for the role of the competitive environment as an additional channel. Our inferences are of particular importance in light of the current ongoing debates on similar disclosure rules (particularly in the United States; cf. \"Disclosure of Tax Havens and Offshoring Act\") as well as for sustainability standard setters.","PeriodicalId":22313,"journal":{"name":"Tax eJournal","volume":"85 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"73035437","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Dane M. Christensen, Hengda Jin, Suhas A. Sridharan, Laura A. Wellman
We examine whether firms’ political hedging activities are effective at mitigating political risk. Focusing on the risk induced by partisan politics, we measure political hedging as the degree to which firms’ political connections are balanced across Republican and Democratic candidates. We find that greater political hedging is associated with reduced stock return volatility, particularly during periods of higher policy uncertainty. Similarly, greater political hedging is associated with reduced crash risk, investment volatility, and earnings volatility. Moreover, the reduction in earnings volatility appears to relate to both a firm’s taxes and its operating activities, as we find that greater political hedging is associated with reduced cash effective tax rate volatility and pretax income volatility. We further find investors are better able to anticipate future earnings for firms that engage in political hedging, suggesting that political hedging helps improve firms’ information environments. Lastly, we perform an event study using President Obama’s Clean Power Plan. We find that on the days this policy proposal was debated in Congress, energy and utility firms experienced heightened intraday return volatility (relative to other firms and nonevent days). However, this heightened volatility is mitigated for energy and utility firms that are more politically hedged. Overall, we conclude that political hedging is an effective risk management tool that helps mitigate firm risk. This paper was accepted by Suraj Srinivasan, accounting.
{"title":"Hedging on the Hill: Does Political Hedging Reduce Firm Risk?","authors":"Dane M. Christensen, Hengda Jin, Suhas A. Sridharan, Laura A. Wellman","doi":"10.1287/mnsc.2021.4050","DOIUrl":"https://doi.org/10.1287/mnsc.2021.4050","url":null,"abstract":"We examine whether firms’ political hedging activities are effective at mitigating political risk. Focusing on the risk induced by partisan politics, we measure political hedging as the degree to which firms’ political connections are balanced across Republican and Democratic candidates. We find that greater political hedging is associated with reduced stock return volatility, particularly during periods of higher policy uncertainty. Similarly, greater political hedging is associated with reduced crash risk, investment volatility, and earnings volatility. Moreover, the reduction in earnings volatility appears to relate to both a firm’s taxes and its operating activities, as we find that greater political hedging is associated with reduced cash effective tax rate volatility and pretax income volatility. We further find investors are better able to anticipate future earnings for firms that engage in political hedging, suggesting that political hedging helps improve firms’ information environments. Lastly, we perform an event study using President Obama’s Clean Power Plan. We find that on the days this policy proposal was debated in Congress, energy and utility firms experienced heightened intraday return volatility (relative to other firms and nonevent days). However, this heightened volatility is mitigated for energy and utility firms that are more politically hedged. Overall, we conclude that political hedging is an effective risk management tool that helps mitigate firm risk. This paper was accepted by Suraj Srinivasan, accounting.","PeriodicalId":22313,"journal":{"name":"Tax eJournal","volume":"57 222 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-12-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"83294643","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-12-09DOI: 10.35609/gcbssproceeding.2020.11(160)
I.F.A. Prawira, Hanifa Zulhaimi
Objective - Covid-19 is a disaster that impacts various sectors of life, one of which has an impact on a country's tax revenue. Tax incentives are one of the policy steps that the Indonesian government has taken to face the economic strike due to the Covid-19 pandemic. This study aims to examine the factors that influence the implementation of employee income tax policies during the Covid-19. Methodology/Technique - This is a qualitative research using an interpretive paradigm with phenomenological methods. The data of this study are the results of observations and interviews with Corporate Taxpayers, Tax Experts, and Tax Officers. Based on the results of the interview, there are several factors that affect taxpayers' willingness to take advantage of this policy, including the ease of submitting incentives, certainty not to be audited, and not adding to the company's burden. Findings - Employers take advantage of this incentive, namely the company has an interest in maintaining the internal stability of the company. The provision of this incentive will increase (at least maintain) the purchasing power of workers and create a conducive business atmosphere. So, it is true that entrepreneurs will flock to take advantage of this facility. Novelty - This policy is expected to reduce the burden on business activities and help improve the condition of the company's cash flow, particularly during and after the epidemic. Thus, the company is expected not to terminate employment. If this condition occurs, there is potential for the national economy to keep moving, both in terms of production and consumption. Type of Paper - Empirical. Keywords: Employee Income Tax; Tax Policy; Tax Incentive; Covid-19 JEL Classification: H24, H29. URI: http://gatrenterprise.com/GATRJournals/AFR/vol6.1_3.html DOI: https://doi.org/10.35609/afr.2021.6.1(3) Pages 69 – 77
{"title":"Phenomenology of Employee Income Tax Policies during the COVID-19 in Indonesia","authors":"I.F.A. Prawira, Hanifa Zulhaimi","doi":"10.35609/gcbssproceeding.2020.11(160)","DOIUrl":"https://doi.org/10.35609/gcbssproceeding.2020.11(160)","url":null,"abstract":"Objective - Covid-19 is a disaster that impacts various sectors of life, one of which has an impact on a country's tax revenue. Tax incentives are one of the policy steps that the Indonesian government has taken to face the economic strike due to the Covid-19 pandemic. This study aims to examine the factors that influence the implementation of employee income tax policies during the Covid-19.\u0000\u0000Methodology/Technique - This is a qualitative research using an interpretive paradigm with phenomenological methods. The data of this study are the results of observations and interviews with Corporate Taxpayers, Tax Experts, and Tax Officers. Based on the results of the interview, there are several factors that affect taxpayers' willingness to take advantage of this policy, including the ease of submitting incentives, certainty not to be audited, and not adding to the company's burden.\u0000\u0000Findings - Employers take advantage of this incentive, namely the company has an interest in maintaining the internal stability of the company. The provision of this incentive will increase (at least maintain) the purchasing power of workers and create a conducive business atmosphere. So, it is true that entrepreneurs will flock to take advantage of this facility.\u0000\u0000Novelty - This policy is expected to reduce the burden on business activities and help improve the condition of the company's cash flow, particularly during and after the epidemic. Thus, the company is expected not to terminate employment. If this condition occurs, there is potential for the national economy to keep moving, both in terms of production and consumption.\u0000\u0000Type of Paper - Empirical.\u0000\u0000Keywords: Employee Income Tax; Tax Policy; Tax Incentive; Covid-19\u0000\u0000JEL Classification: H24, H29.\u0000\u0000URI: http://gatrenterprise.com/GATRJournals/AFR/vol6.1_3.html\u0000\u0000DOI: https://doi.org/10.35609/afr.2021.6.1(3)\u0000\u0000Pages 69 – 77","PeriodicalId":22313,"journal":{"name":"Tax eJournal","volume":"60 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-12-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"91308829","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We study the causal effect of short selling on asset pricing anomalies by exploiting a novel exogenous shock to short selling. After the Job and Growth Tax Relief Reconciliation Act (JGTRRA) of 2003, equity lenders are reluctant to lend shares around the dividend record dates because substitute dividends that they would receive are taxed at ordinary income rates while qualified dividends are taxed at 15 percent, thus creating a negative shock to short selling. Using arguably the most comprehensive set of anomalies to date and the difference-in-differences (DID) regression framework, we find that anomalies become stronger after the dividend record months in the post-JGTRRA periods, driven by stronger mispricing in the dividend record months. We further show that the effect mainly comes from the overpriced stocks. Overall, our results provide strong evidence that most anomalies are likely due to mispricing, with valuation anomalies as an exception.
{"title":"Mispricing and Anomalies: An Exogenous Shock to Short Selling from JGTRRA","authors":"Yufeng Han, Yueliang Lu, Weike Xu, Guofu Zhou","doi":"10.2139/ssrn.3730653","DOIUrl":"https://doi.org/10.2139/ssrn.3730653","url":null,"abstract":"We study the causal effect of short selling on asset pricing anomalies by exploiting a novel exogenous shock to short selling. After the Job and Growth Tax Relief Reconciliation Act (JGTRRA) of 2003, equity lenders are reluctant to lend shares around the dividend record dates because substitute dividends that they would receive are taxed at ordinary income rates while qualified dividends are taxed at 15 percent, thus creating a negative shock to short selling. Using arguably the most comprehensive set of anomalies to date and the difference-in-differences (DID) regression framework, we find that anomalies become stronger after the dividend record months in the post-JGTRRA periods, driven by stronger mispricing in the dividend record months. We further show that the effect mainly comes from the overpriced stocks. Overall, our results provide strong evidence that most anomalies are likely due to mispricing, with valuation anomalies as an exception.","PeriodicalId":22313,"journal":{"name":"Tax eJournal","volume":"26 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-12-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"77774084","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Bart Dierynck, M. Jacob, Maximilian A. Müller, Christian P. H. Peters, Victor van Pelt
To spotlight whether firms pay their "fair share'' and thereby crowd out aggressive tax avoidance, regulators are increasingly mandating tax disclosures. The assumption is that disclosures should help users identify aggressive tax avoiders. However, we find retail investors become worse at identifying firms using aggressive avoidance methods once receiving designated tax disclosures along with standard effective tax rate reconciliations. This experimental finding is consistent with our prediction rooted in attribute substitution theory that investors fixate on the designated tax disclosures when forming perceptions about whether firms pay their fair share. Our findings call for caution when implementing mandatory public tax disclosure.
{"title":"Public Tax Disclosures and Investor Perceptions","authors":"Bart Dierynck, M. Jacob, Maximilian A. Müller, Christian P. H. Peters, Victor van Pelt","doi":"10.2139/ssrn.3729938","DOIUrl":"https://doi.org/10.2139/ssrn.3729938","url":null,"abstract":"To spotlight whether firms pay their \"fair share'' and thereby crowd out aggressive tax avoidance, regulators are increasingly mandating tax disclosures. The assumption is that disclosures should help users identify aggressive tax avoiders. However, we find retail investors become worse at identifying firms using aggressive avoidance methods once receiving designated tax disclosures along with standard effective tax rate reconciliations. This experimental finding is consistent with our prediction rooted in attribute substitution theory that investors fixate on the designated tax disclosures when forming perceptions about whether firms pay their fair share. Our findings call for caution when implementing mandatory public tax disclosure.","PeriodicalId":22313,"journal":{"name":"Tax eJournal","volume":"15 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"76788240","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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