Economic Versus Non-Economic Factors: An Analysis of Corporate Tax Compliance

Abstract:     
Tax compliance has been explored from perspectives of the individual’s rational pursuit of outcome maximization and recently from the perspective of the individual’s personal and social norms. While the former views taxpayers as profit-maximizing rational actors, the latter views taxpayers as moral/social actors. Both streams of research focus on individual non-compliance; but compliance behavior of corporate decision makers may not mimic individual. Our interest is corporate tax compliance. Questions addressed are these: Do corporate decision makers’ compliance decisions accord with economic theory? Do corporate decision makers’ compliance decisions accord with non-economic theories of moral/social norms? Results indicate that the following affect corporate compliance decisions: (1) perceived expected value of transaction; and (2) specific norms regarding the behavior. Results of a hierarchical regression indicate that norms moderate the expected value of the transaction.

Number of Pages in PDF File: 38

working papers series