Why Do Firms Evade Taxes? The Role of Information Sharing and Financial Sector Outreach

Posted: 29 Mar 2013 Last revised: 20 Mar 2014

See all articles by Thorsten Beck

Thorsten Beck

City University London - Sir John Cass Business School; Tilburg University - European Banking Center, CentER

Chen Lin

The University of Hong Kong - Faculty of Business and Economics

Yue Ma

City University of Hong Kong (CityUHK) - Department of Economics & Finance

Multiple version iconThere are 2 versions of this paper

Date Written: March 26, 2013

Abstract

Tax evasion is a wide-spread phenomenon across the globe and even an important factor of the ongoing sovereign debt crisis. We show that firms in countries with better credit information sharing systems and higher branch penetration evade taxes to a lesser degree. This effect is stronger for smaller firms, firms in smaller cities and towns, firms in industries relying more on external financing, and firms in industries and countries with greater growth potential. This effect is robust to instrumental variable analysis, controlling for firm fixed effects in a smaller panel dataset of countries, and many other robustness tests.

Suggested Citation

Beck, Thorsten and Lin, Chen and Ma, Yue, Why Do Firms Evade Taxes? The Role of Information Sharing and Financial Sector Outreach (March 26, 2013). Journal of Finance 69, 763-817. Available at SSRN: https://ssrn.com/abstract=2240337

Thorsten Beck

City University London - Sir John Cass Business School ( email )

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom

Tilburg University - European Banking Center, CentER ( email )

PO Box 90153
Tilburg, 5000 LE
Netherlands

Chen Lin (Contact Author)

The University of Hong Kong - Faculty of Business and Economics ( email )

Pokfulam Road
Hong Kong
China

Yue Ma

City University of Hong Kong (CityUHK) - Department of Economics & Finance ( email )

83 Tat Chee Avenue
Kowloon
Hong Kong

HOME PAGE: http://www.cb.cityu.edu.hk/staff/yuema24

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