TY - BOOK

T1 - Tax compliance and behavioral responses to taxes

AU - Jarzembski, Janine Katharina

PY - 2024/5/8

Y1 - 2024/5/8

N2 - This dissertation is composed of three articles that examine the subject of tax avoidance from different angles. The first article focuses on the effectiveness of regulations that aim to increase tax compliance. Using a survey of 10,000 individual taxpayers, it is shown that increasing the quality of service interaction between the tax administration and taxpayers is associated with increased tax compliance by taxpayers. This effect is mainly driven by self-preparing taxpayers with low tax knowledge and high tax morale. Furthermore, it is shown that this positive association is mainly influenced by tax offices with higher “coercive power”. The second article deals with corporate behavioral responses to regulations that aim to curb tax avoidance. Since 2016, the U.K. tax administration requires firms that exceed specific size thresholds to disclose their tax strategy in qualitative form. It is investigated whether firms strategically influence the content of their disclosed tax strategy to avoid, for example, potential reputational costs. The investigation is based on disclosed tax strategies of U.K. companies listed on the FTSE 100 and FTSE 250. The empirical study shows that there is no association between “tone”, i.e. the content of the disclosed tax strategy, and the firm’s actual tax policy as long as the probability of detecting misstatements is sufficiently low. The third article addresses the consequences of corporate tax planning. It is examined whether the revelation of tax planning is associated with reputational costs in the sense of lost sales or increased advertising costs, and whether this association is influenced by firms’ CSR performance. Data on news about firms’ tax planning from Lee et al. (2021) is used to identify companies that engage in tax planning. The study does not find support for an association between firms’ sales or advertising expenses and news about firms’ tax planning. Moreover, no support is found that this link is magnified by the firms’ CSR performance.

AB - This dissertation is composed of three articles that examine the subject of tax avoidance from different angles. The first article focuses on the effectiveness of regulations that aim to increase tax compliance. Using a survey of 10,000 individual taxpayers, it is shown that increasing the quality of service interaction between the tax administration and taxpayers is associated with increased tax compliance by taxpayers. This effect is mainly driven by self-preparing taxpayers with low tax knowledge and high tax morale. Furthermore, it is shown that this positive association is mainly influenced by tax offices with higher “coercive power”. The second article deals with corporate behavioral responses to regulations that aim to curb tax avoidance. Since 2016, the U.K. tax administration requires firms that exceed specific size thresholds to disclose their tax strategy in qualitative form. It is investigated whether firms strategically influence the content of their disclosed tax strategy to avoid, for example, potential reputational costs. The investigation is based on disclosed tax strategies of U.K. companies listed on the FTSE 100 and FTSE 250. The empirical study shows that there is no association between “tone”, i.e. the content of the disclosed tax strategy, and the firm’s actual tax policy as long as the probability of detecting misstatements is sufficiently low. The third article addresses the consequences of corporate tax planning. It is examined whether the revelation of tax planning is associated with reputational costs in the sense of lost sales or increased advertising costs, and whether this association is influenced by firms’ CSR performance. Data on news about firms’ tax planning from Lee et al. (2021) is used to identify companies that engage in tax planning. The study does not find support for an association between firms’ sales or advertising expenses and news about firms’ tax planning. Moreover, no support is found that this link is magnified by the firms’ CSR performance.

U2 - 10.15488/17166

DO - 10.15488/17166

M3 - Doctoral thesis

CY - Hannover

ER -