Don't Blame the Messenger: A Field Experiment on Delivery Methods for Increasing Tax Compliance

Abstract

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Does government institutional reform deter corporate tax evasion? Evidence from China

“…He found that incentive compensation plans based on CEO after tax performance could provide incentives for companies to evade tax [ 41 ]. Consistent with Phillip’s (2003) research results, Armstrong et al (2012) also did not observe a significant relationship between general CEO compensation and corporate tax evasion [ 42 ]. In other words, corporate tax evasion is related to whether CEO compensation is linked to their performance [ 43 , 44 ].…”

“…However, the effectiveness of deterrence largely depends on whether deterrence can be achieved. For example, Ortega and Scartascini (2016) find that the method may affect the effectiveness of deterrence [ 42 ]. According to their study, taxpayers may update their perceived probability of detection depending on the delivery method chosen by the authority, so that more selective and more costly ones may have a higher deterrence effect.…”