Abstract

http://ssrn.com/abstract=2234197
 


 



The Real Effects of Opacity: Evidence from Tax Avoidance


Jon N. Kerr


Baruch College - CUNY, Zicklin School of Business

November 19, 2012

Columbia Business School Research Paper No. 13-16

Abstract:     
This study provides evidence on a significant real consequence of an opaque financial reporting information environment: increased corporate tax avoidance. Using an international sample of firms, I find that firms with a more opaque information environment, as measured at both the firm and country level, exhibit higher levels of firm-specific tax avoidance. More importantly, additional tests using the adoption of International Financial Reporting Standards (IFRS) as an exogenous shock to the information environment while simultaneously controlling for tax regime changes around the date of IFRS adoption provide direct evidence on the direction of the association, namely that opacity causes tax avoidance. Similarly, the results from tests using the initial enforcement of insider trading laws provide additional support for a directional hypothesis. In support of the firm-level findings, I also find evidence in the aggregate that opacity is associated with countries collecting less corporate tax revenues as a percentage of gross domestic product. In whole, these findings suggest that tax avoidance is a significant real effect of opacity with implications for practitioners, regulators, researchers, and tax-enforcement agencies.

Number of Pages in PDF File: 61

Keywords: Tax Avoidance, IFRS Adoption, Information Opacity

JEL Classification: C23, F23, G14, H25, H26, K33, M41

working papers series


Download This Paper

Date posted: March 16, 2013  

Suggested Citation

Kerr, Jon N., The Real Effects of Opacity: Evidence from Tax Avoidance (November 19, 2012). Columbia Business School Research Paper No. 13-16. Available at SSRN: http://ssrn.com/abstract=2234197 or http://dx.doi.org/10.2139/ssrn.2234197

Contact Information

Jon N. Kerr (Contact Author)
Baruch College - CUNY, Zicklin School of Business ( email )
17 Lexington Avenue
New York, NY 10021
United States
646-312-3164 (Phone)
646-312-3161 (Fax)
Feedback to SSRN


Paper statistics
Abstract Views: 660
Downloads: 180
Download Rank: 96,878

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo8 in 0.313 seconds