Eva Eberhartinger, Reyhaneh Safaei, Caren Sureth-Sloane, Yuchen Wu
{"title":"Are Risk-based Tax Audit Strategies Rewarded? An Analysis of Corporate Tax Avoidance","authors":"Eva Eberhartinger, Reyhaneh Safaei, Caren Sureth-Sloane, Yuchen Wu","doi":"10.2139/ssrn.3911228","DOIUrl":"https://doi.org/10.2139/ssrn.3911228","url":null,"abstract":"This study examines the relation between risk-based tax audit strategies and corporate tax avoidance. We exploit OECD data across 54 countries on risk profiling, predictive modeling, and internal intelligence functions in tax administrations from 2014 to 2017 to investigate whether risk-based tax audits have an incremental effect on tax avoidance beyond enforcement. Our results suggest that the use of risk-based tax audits is associated with lower tax avoidance when controlling for tax enforcement, firm-specific, and country-specific factors. Cross-sectional tests indicate that risk-based tax audit strategies are effective tools to curb tax avoidance across firms of all sizes. The results of additional cross-sectional analyses indicate that risk-based tax audits are more effective in countries with low governance quality, high GDP, and low trust in governments. In additional tests, we use country-level data on tax administration performance and find evidence that countries with a risk-based audit strategy have lower costs of tax enforcement and improve the performance of tax authorities. Overall, our findings indicate that risk-based tax audit strategies have an incremental effect on attenuating firms’ tax avoidance and increasing tax revenue.","PeriodicalId":108229,"journal":{"name":"TRR 266 Accounting for Transparency Working Paper Series","volume":"101 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114891139","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}
{"title":"How Does Private Firm Disclosure Affect Demand for Public Firm Equity? Evidence from the Global Equity Market","authors":"Jinhwan Kim, Marcel Olbert","doi":"10.2139/ssrn.3864850","DOIUrl":"https://doi.org/10.2139/ssrn.3864850","url":null,"abstract":"We investigate the relationship between private firms’ disclosures and the demand for the equity of their publicly traded peers. Using data on the global movement of public equity, we find that a one standard deviation increase in private firm disclosure transparency – proxied by the number of disclosed private firms’ financial statement line items – reduces global investors’ demand for public equity by 13% to 16% or by $206 million to $253 million in dollar terms. These findings are consistent with private firm disclosures generating negative pecuniary externalities – global investors reallocate their capital away from public firms to more transparent private firms – and less consistent with these disclosures creating positive information externalities that would benefit public firms. Consistent with this interpretation, we find that the reduction in demand for public equity is offset by a comparable increase in capital allocation to more transparent private firms. Using staggered openings of the Bureau van Dijk database offices in each investee country as a plausibly exogenous shock to private firm disclosures, we conclude that the negative relationship between private firm disclosures and public equity demand is likely causal.","PeriodicalId":108229,"journal":{"name":"TRR 266 Accounting for Transparency Working Paper Series","volume":"13 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130160287","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}
{"title":"Tax Knowledge Diffusion via Strategic Alliances","authors":"Jens Mueller, A. Weinrich","doi":"10.2139/ssrn.3532367","DOIUrl":"https://doi.org/10.2139/ssrn.3532367","url":null,"abstract":"We utilize the characteristics of tax knowledge, knowledge diffusion processes, and strategic alliances’ institutionalization to examine whether strategic alliances serve as channels for tax knowledge diffusion between firms. We empirically identify tax knowledge diffusion via strategic alliances by documenting economically meaningful decreases in cash effective tax rates of high-tax firms in strategic alliances with low-tax firms relative to high-tax firms in strategic alliances with other high-tax firms. We identify dynamic treatment effects and find that elapsed time is an important facilitating mechanism of tax knowledge diffusion. Furthermore, we show that geographical proximity, identical industry affiliation, and shared audit firm serve as substitutes rather than as complements for strategic alliances to low-tax firms. Finally, we triangulate our findings to effects on the textual sentiment of 10-K filings and the disclosure of tax haven operations. Overall, our results provide robust evidence for tax knowledge diffusion via strategic alliances.","PeriodicalId":108229,"journal":{"name":"TRR 266 Accounting for Transparency Working Paper Series","volume":"113 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124115437","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}