Religiosity and Tax Avoidance

Abstract

In this paper, we examine religiosity as one determinant of tax avoidance by corporate and individual taxpayers. Prior research suggests a relation between religiosity and risk aversion. Because aggressive tax avoidance strategies involve significant uncertainty and possible penalties and damage to reputation, we predict that higher levels of religiosity are associated with less aggressive (i.e., less risky) tax positions. Consistent with this prediction, we find that firms headquartered in more religious U.S. counties are less likely to avoid taxes. We also find that religiosity is consistently associated with lower tax avoidance by individual taxpayers, as measured by underreported income. These results hold after controlling for several firm-level, as well as county-level, demographic characteristics identified in prior research as affecting tax avoidance by corporate and/or individual taxpayers. We conclude that religiosity is a significant determinant of tax avoidance by corporate and individual taxpayers.

Corporate Governance, Tax Avoidance, and Financial Constraints

“…4 Mills (1998) finds that an additional $1 investment in tax planning results in a $4 reduction in tax liabilities. Following Boone, Khurana, and Raman (2013) and Hasan et al (2014), we use religiosity (defined as the fraction of population in the county of the firm's corporate headquarter that claims affiliation with an organized religion) and the three-digit Standard Industrial Classification (SIC) industry median value of Cash ETR as instruments for tax avoidance. 6 Following Dyreng, Hanlon, and Maydew (2008), we define tax avoidance as the reduction in the firm's taxes relative to its pretax accounting income.…”

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

“…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.…”

“…Recent studies have begun to examine how corporate tax avoidance is affected by social norms, which are incremental to traditional firmlevel and country-level factors. Specifically, Boone et al (2012) find a significant impact of religious norms on corporate tax avoidance. 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.…”

“…Meanwhile, borrowing from the sociology and the economic literature, a new stream of studies explore how corporate tax avoidance is affected by various social norms, such as religious norms (Boone, Khurana, and Raman 2012) and civic norms (Hasan, Hoi, Wu, and Zhang 2016). Furthermore, DeBacker, Heim, and Tran (2015) show that corporations with owners from countries with higher corruption norms avoid more taxes in the U.S., indicating that certain norms could have a cross-border impact on corporate tax avoidance.…”

Agressividade Tributária: Um Survey da Literatura

“…As evidências desta linha de investigação apontam para associações significativas entre vários traços individuais dos gestores e a agressividade fiscal das empresas, tais como: a experiência militar do gestor (Law & Mills, 2017); o narcisismo (Olsen & Stekelberg, 2016); a orientação política e agressividade pessoal (Chyz, 2013); o gênero de seus executivos e dos membros do conselho de administração (Francis, Hasan, Qiang Wu, & Meng Yan, 2014;Lanis, Richardson, & Taylor, 2017); a religiosidade do gestor (Boone, Khurana & Raman, 2013;Dyreng, Mayew & Williams, 2012); suas habilidades e capacidade gerencial (Koester, Shevlin & Wangerin, 2017); e o perfil de remuneração, pensão e incentivos compensatórios (Armstrong, Blouin & Larcker, 2012;Chi, Huang & Sanchez, 2017;Kubick & Masli, 2016).…”