Quality of management schools, strength of auditing and reporting standards and tax evasion

Abstract

Purpose The purpose of this paper is to examine the relationship between the quality of management schools and tax evasion and tests whether the strength of auditing and reporting standards moderates such a relationship. Design/methodology/approach Tax evasion is measured using the macro-indirect approach based on Schneider, Buehn and Monterngro (2010). The quality of management schools is collected from The Global Competitiveness Report for 2014-2015. Findings On the basis of sample of 137 countries, the authors document that the level of tax evasion is negatively associated with the quality of management schools and the strength of auditing and reporting standards. When the authors distinguish between low- and high-strength of auditing and reporting standards countries, the authors find that the negative and significant association remains stable only for high-strength of auditing and reporting standards countries. Practical implications These results imply that the quality of management schools through its output (managers, fiscal controllers, auditors and businessmen) may increase the tendency of individuals in a given country to comply with tax rules and that legal enforcement may affect the ethical behaviours of these actors with regard to tax evasion. Originality/value The empirical findings have policy implications for governments with high levels of tax evasion since they highlight the importance of the quality of higher educational system in shaping tax compliance behaviour.

Strength of auditing and reporting standards, corruption and money laundering: a cross-country investigation

“…This result is in line with that reported by Karaibrahimoglu and Cangarli (2016) who have documented that the SARS is positively associated with ethical behaviours of firms. The finding is also in line with Khlif and Guidara (2018) who have provided evidence that the SARS is negatively associated with a specific form of financial crime (tax evasion). Under strong auditing and reporting standards, auditors will assess the risks of a transaction being suspect of money laundering and the risks of being accused of false reporting.…”

“…Operating under strong auditing and accounting standards, auditors will act with a high level of scepticism when conducting their audit mission to detect suspicious operations linked to money laundering and report them. For instance, Khlif and Guidara (2018) posit that the SARS play an important role in shaping the commitments towards transparency in one country.…”

Board Meeting Attendance and Corporate Tax Avoidance: Evidence from the UK

“…There has been growing attention in the economic literature on tax avoidance-mainly focused on the determinants, magnitude, and consequences (Hanlon & Heitzman, 2010;Khlif & Guidara, 2018) of tax. The classic definition is that tax avoidance is the "reduction of explicit taxes" (Dyreng, Hanlon, & Maydew, 2010).…”

The Strength of Audits, Reporting Standards and Corruption, on Tax Evasion: A Cross-Country Study

“…Measurement of tax evasion using shadow economy has been widely used by several studies (Amara and Khlif, 2018;Cebula, 1997;Khlif and Guidara, 2018). According to Smith (1994), shadow economy is the production of goods and services both legal and illegal that are missed from the calculation of Gross Domestic Product (GDP).…”

“…If regulations are weak, companies can choose not to disclose information or manipulate it (Maria and Nasca, 2018). Furthermore, Khlif and Guidara (2018) suggest that good quality accountants are needed as a means to promote transparency and ethical action, comply with tax regulations and invite their clients to avoid tax evasion practices. Based on the discussion carried out above, this research hypothesizes the following:…”