Multitasking in Corporate Tax Evasion

27 Pages Posted: 30 Sep 2013 Last revised: 22 Jul 2014

Date Written: September 27, 2013

Abstract

This paper analyzes corporate tax evasion in a principal-agent model with multitasking. A firm-owner hires a specialist tax manager who chooses the quantity as well as the quality of tax evasion. Higher quality is a form of self-insurance and lowers the firm's expected fine for tax evasion. In contrast to earlier literature, we find that asymmetric information inside firms may enhance the efficacy of tax enforcement. This occurs because highly sophisticated tax evasion activities are often difficult to understand and assess for the non-specialist shareholder, who commissions fewer such activities as a result of this informational disadvantage.

Keywords: Corporate Tax Evasion, Principal-Agent Model, Tax Enforcement Policy, Multitasking

JEL Classification: H25, H26, D82

Suggested Citation

Meyer-Brauns, Philipp, Multitasking in Corporate Tax Evasion (September 27, 2013). Working Paper of the Max Planck Institute for Tax Law and Public Finance No. 2013-05, Available at SSRN: https://ssrn.com/abstract=2331969 or http://dx.doi.org/10.2139/ssrn.2331969

Philipp Meyer-Brauns (Contact Author)

Dimensional Fund Advisors ( email )

6300 Bee Cave Road, Building One
Austin, TX 78746
United States

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