Importing Corruption Culture from Overseas: Evidence from Corporate Tax Evasion in the United States

DeBacker, Jason; Heim, Bradley T.; Tran, Anh

doi:10.2139/ssrn.1941412

Cited by 33 publications

(36 citation statements)

References 23 publications

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“…Our results add to the new stream of literature that examines the effect of social norms on corporate tax avoidance (e.g., Boone et al 2012;DeBacker et al 2015;Hasan et al 2016). We provide evidence of a previously undocumented spillover effect of tax related social norms, tax morale, through FIIs on investee firms' tax avoidance.…”

Section: Introductionsupporting

confidence: 52%

“…Hasan et al (2016) study the effect of civic norms on corporate tax avoidance, and they find that the levels of civic norms in US counties are negatively related to tax avoidance activities of corporations with headquarters located in those counties. DeBacker et al (2015) find that corporations with owners from countries with higher corruption norms avoid more taxes in the U.S. Although informative, these papers do not study the direct impact of tax-related social norms, tax morale, on corporate tax avoidance, and do not investigate whether tax morale can be exported from one country to another.…”

Section: Prior Literature and Hypothesis Developmentmentioning

confidence: 96%

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The Effect of Foreign Institutional Ownership on Corporate Tax Avoidance: International Evidence

et al. 2016

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Abstract:We find robust evidence that foreign institutional investors are negatively associated with their investee firms' tax avoidance. To mitigate endogeneity concerns, we apply three identification strategies. First, we implement a two-stage least squares model. Second, we perform a difference-in-differences analysis by exploiting China's legal reform, Qualified Foreign Institutional Investors program, as a quasi-natural experiment. Third, we compare changes in corporate tax avoidance in response to a significant increase in FIIs. We further find that the negative association is dominated by FIIs from countries with high tax morale and FIIs from countries with strong shareholder protection. Finally, we find that the extent of tax morale and shareholder protection in the country where an investee firm is located also matters. We conclude that FIIs play an active role in shaping investee firms' corporate tax avoidance policy.JEL classification: G23, G32, H26, M41

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Section: Introductionsupporting

confidence: 52%

Section: Prior Literature and Hypothesis Developmentmentioning

confidence: 96%

The Effect of Foreign Institutional Ownership on Corporate Tax Avoidance: International Evidence

et al. 2016

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“…Although it is often presumed that firms, especially small firms with self-reported earnings, tend to have high likelihoods of non-compliance, evidence is very scarce. DeBacker et al (2012), Kosonen and Ropponen (2013), Carrillo et al (2014), Slemrod et al (2015 and Pomeranz (2015) are notable exceptions that are complementary to our paper in understanding tax-compliance behavior of firms. However, as opposed to our paper, these studies do not contribute to the question of whether small firms are subject to behavioral inconsistencies in the context of tax compliance.…”

Section: Introductionmentioning

confidence: 75%

Tax Compliance and Information Provision A Field Experiment with Small Firms

Doerrenberg

Schmitz

2015

SSRN Journal

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Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW.Tax compliance and information provision -A field experiment with small firms * Philipp Doerrenberg Jan SchmitzApril 22, 2015 AbstractWe study tax compliance in Slovenia using data generated in a field experiment. Small accounting companies were randomly assigned to an untreated control group and two treatment groups. Companies in the first treatment group received a letter that highlighted the importance of paying taxes and informed about the likelihood of becoming subject to an audit. In the second treatment group, tax officers from the tax authorities handed out in person the same letter that companies in the first treatment group received by post. The results indicate that such letters can increase compliance, and trigger even more compliance if handed over in person. These findings are in line with the theoretical predictions that we derive to rationalize the experiment.JEL Classification: H20, H32, H50, C93

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“…that the hierarchical values of one's country of origin would still exert influence over climbing outcomes because individuals carry their culture with them even when they are far from home (15). For example, the cultural attitudes of one's home country toward corruption predict parking violations among United Nations diplomats working in the United States (16) and tax evasion levels among foreign business owners in the United States (17). These findings demonstrate that the cultural values of one's home country predict behavior even when people are abroad.…”

mentioning

confidence: 80%

Hierarchical cultural values predict success and mortality in high-stakes teams

Anicich

Swaab

Galinsky

2015

Proc. Natl. Acad. Sci. U.S.A.

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Functional accounts of hierarchy propose that hierarchy increases group coordination and reduces conflict. In contrast, dysfunctional accounts claim that hierarchy impairs performance by preventing low-ranking team members from voicing their potentially valuable perspectives and insights. The current research presents evidence for both the functional and dysfunctional accounts of hierarchy within the same dataset. Specifically, we offer empirical evidence that hierarchical cultural values affect the outcomes of teams in high-stakes environments through group processes. Experimental data from a sample of expert mountain climbers from 27 countries confirmed that climbers expect that a hierarchical culture leads to improved team coordination among climbing teams, but impaired psychological safety and information sharing compared with an egalitarian culture. An archival analysis of 30,625 Himalayan mountain climbers from 56 countries on 5,104 expeditions found that hierarchy both elevated and killed in the Himalayas: Expeditions from more hierarchical countries had more climbers reach the summit, but also more climbers die along the way. Importantly, we established the role of group processes by showing that these effects occurred only for group, but not solo, expeditions. These findings were robust to controlling for environmental factors, risk preferences, expedition-level characteristics, country-level characteristics, and other cultural values. Overall, this research demonstrates that endorsing cultural values related to hierarchy can simultaneously improve and undermine group performance.hierarchy | culture | groups | coordination | psychological safety H ierarchy helps groups conquer many of the challenges and threats that they face. For example, hierarchical differentiation can increase group performance by clearly defining roles that facilitate coordination (1) and the integration of information (2, 3) and by creating patterns of deference that reduce intragroup conflict, especially when group members are interdependent (4, 5).Hierarchy, however, also has the potential to kill. Rigid hierarchies limit low-ranking group members from voicing their opinions and concerns. This lack of participative voice can produce negative outcomes, including greater mortality (6, 7). Hierarchy can also reduce feelings of psychological safety (8), thereby impairing group communication (9) and performance (10). In contrast, when hierarchies allow lower ranked individuals to speak up and share relevant information, groups can effectively identify critical errors and prevent them from having adverse consequences (11).The above research suggests that hierarchy can produce both the best and the worst outcomes for groups and organizations. Our research seeks to establish the dual role of hierarchy by drawing on experimental data from an international sample of expert mountain climbers and over 100 y of archival data from mountain-climbing expeditions in the Himalayas. We show that expert climbers believe that the cultural value of h...

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Importing Corruption Culture from Overseas: Evidence from Corporate Tax Evasion in the United States

Cited by 33 publications

References 23 publications

The Effect of Foreign Institutional Ownership on Corporate Tax Avoidance: International Evidence

The Effect of Foreign Institutional Ownership on Corporate Tax Avoidance: International Evidence

Tax Compliance and Information Provision A Field Experiment with Small Firms

Hierarchical cultural values predict success and mortality in high-stakes teams

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