Tax-Related Corporate Political Activity Research: A Literature Review

Barrick, John A.; Brown, Jennifer L.

doi:10.2139/ssrn.2994259

Cited by 4 publications

(15 citation statements)

References 103 publications

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“…Our results extend the existing literature on political influence and tax evasion, summarized in Barrick and Brown (2018), by showing the effect that various sources of influence over government policymaking have on tax compliance. Overall, our findings support the conjectures in Tyler (2006) and Levi (1998) that taxpayers evade more tax when they have less confidence in the government's policymaking process.…”

Section: Resultssupporting

confidence: 83%

“…We also find a positive and significant correlation between both firm age (ρ = 0.103) and firm size (i.e., the number of firm employees) (ρ = 0.180) and the perceived influence the firm itself has over government policymaking. This suggests larger, older firms are more likely to exhibit influence over domestic government policymaking consistent with larger firms having more bargaining power or economic sway (Barrick and Brown 2018). We also observe a significantly positive correlation between the firm's perception of its own influence and its perception of the influence of other domestic firms (ρ = 0.381) and foreign firms (ρ = 0.137).…”

Section: Methodsmentioning

confidence: 50%

“…Furthermore, the survey data we use could suffer from endogeneity concerns. Specifically, government policies, including tax specific policies, are not necessarily randomly assigned and are likely affected by influence itself (e.g., Barrick and Brown 2018). Additionally, while we believe the study of tax evasion in developing countries is important, it is possible that our results do not generalize to more developed countries.…”

Section: Resultsmentioning

confidence: 96%

“…In addition, our study contributes to the literature on firms' political connectedness and the effects of lobbying activities on firms' tax planning strategies (see Barrick and Brown (2018) for a review). While existing work focuses on firms' own political activities and tax compliance (e.g., Richter, Samphantharak, and Timmons 2009;Brown, Drake, and From a policy perspective, our results suggest that governments should consider firms' perceptions of the various influences over the government's policymaking process when analyzing policies.…”

Section: Introductionmentioning

confidence: 89%

“…Like most archival data, survey data can suffer from endogeneity concerns. Specifically, government policies, including tax specific policies, are not necessarily randomly assigned and are affected by lobbyingthat is, influenceitself (e.g., Barrick and Brown 2018). In addition, like most empirical proxies, our measures of perceived government influence and tax evasion are imperfect.…”

Section: Introductionmentioning

confidence: 99%

See 4 more Smart Citations

Why Pay Our Fair Share? How Perceived Influence over Laws Affects Tax Evasion

Mason

Utke²,

Williams

2019

The Journal of the American Taxation Association

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We examine how the relation between taxpayers and their government affects tax evasion. Specifically, we examine how perceived influence over government policymaking affects firms' decisions to evade tax. We argue that firms are less willing to comply with tax laws when they perceive the influence over their government to be unfavorable to them or the result of an unfair policymaking process. Consistent with this argument, we find that firms evade more tax when other domestic firms have more perceived influence over domestic government policymaking. This suggests a potential negative externality of lobbying: higher tax evasion by other firms. However, government effectiveness or lack of corruption eliminates the positive relation between evasion and perceived influence over policymaking. Our study is the first to document the relation between perceived influence over government policymaking and tax evasion. Our results suggest that limiting domestic firms' influence over policymaking could help governments decrease tax evasion. JEL Classifications: H26. Data Availability: Data used in this study are available from public sources identified in the paper, except as otherwise specified.

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Section: Resultssupporting

confidence: 83%

Section: Methodsmentioning

confidence: 50%

Section: Resultsmentioning

confidence: 96%

Section: Introductionmentioning

confidence: 89%

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

Why Pay Our Fair Share? How Perceived Influence over Laws Affects Tax Evasion

Mason

Utke²,

Williams

2019

The Journal of the American Taxation Association

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A Review of Corporate Social Responsibility and Reputational Costs in the Tax Avoidance Literature*

Krieg

2021

Accounting Perspectives

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In recent years, academic researchers, policymakers, and the public have increasingly focused on the tax avoidance behavior of corporations. At the same time, firms are increasingly pressured to incorporate corporate social responsibility (CSR) into their decision making, leading to heightened academic interest in CSR. Given that opponents of corporate tax avoidance often argue that avoiding tax is socially irresponsible, we review the growing literature surrounding this issue. We begin with a theoretical review of how corporate tax avoidance fits into the CSR framework. We then review the empirical evidence on the interrelationship between CSR and firm reputation in the tax avoidance literature. We frame our review around three questions: (i) Do firms view tax avoidance as a CSR issue? (ii) Do stakeholders view tax avoidance as socially irresponsible, leading to reputational costs of tax avoidance? And (iii) Do firms change their tax avoidance behavior due to fear of these reputational consequences? Throughout our review, we provide discussions on the state of the current literature and offer suggestions for future research opportunities.

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Defining and Managing Corporate Tax Risk: Perceptions of Tax Risk Experts*

Brühne

Schanz

2022

Contemporary Accting Res

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We examine the "black box" of corporate tax risk management by providing unique insights into practitioners' tax risk perceptions, tax risk management practices, and influences leading to variation in tax risk management practices across firms. Opening this black box is important as tax risk has become an increasingly relevant aspect in corporate tax practice-little is yet known about how firms define and manage tax-related risks. We perform our analysis based on 33 expert interviews, which we conducted with 42 tax risk experts. The first important finding from our interviews is that tax risk is a multifaceted and contextdependent construct, consisting of six tax risk components: financial, reputational, compliance, political, tax process, and personal liability risk. Furthermore, we find that perceived tax risk varies substantially between corporate insiders and corporate outsiders. Our interview insights further reveal that firms' most frequently used tax risk management practices relate to some form of tax communication. The tax departments' rationale for using tax communication as a key tax risk management practice is to protect the firm-in particular, the CFO-from three types of pressure: public pressure, peer pressure, and regulatory pressure. Our analysis has important implications for future studies. First, our insights reveal that several tax risk components are not sufficiently covered by common tax risk measures used by the archival literature. Second, we find that communication has a key role in managing tax risk. This deviates from the purely supportive role that extant risk management frameworks have assigned to communication.

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Tax-Related Corporate Political Activity Research: A Literature Review

Cited by 4 publications

References 103 publications

Why Pay Our Fair Share? How Perceived Influence over Laws Affects Tax Evasion

Why Pay Our Fair Share? How Perceived Influence over Laws Affects Tax Evasion

A Review of Corporate Social Responsibility and Reputational Costs in the Tax Avoidance Literature*

Defining and Managing Corporate Tax Risk: Perceptions of Tax Risk Experts*

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