Publication Type

Journal Article

Version

acceptedVersion

Publication Date

12-2018

Abstract

Using aninternational sample of firms from 25 countries and a country-level index for societal trust, we document that societal trust is negatively associated with tax avoidance, even after controlling for other institutional determinants, such as home country legal institutions and tax system characteristics.We explore the effects of two country-level institutional characteristics—strength of lega linstitutions and capital market pressure—on the relation between societal trust and tax avoidance. We find that the relation between trust and tax avoidance is less pronounced when legal institutions in a country are stronger and is more pronounced when capital market pressure is stronger. Finally, we examine the relation between societal trust and tax evasion, an extreme and illegal form of tax avoidance. We show that societal trust is negatively related to tax evasion and the negative relation is less pronounced when legal institutions are stronger.

Keywords

Societal trust, tax avoidance, tax evasion, legal institutions, capital market pressure

Discipline

Accounting | Business Law, Public Responsibility, and Ethics | Corporate Finance | Taxation

Research Areas

Corporate Reporting and Disclosure

Publication

Review of Accounting Studies

Volume

23

Issue

4

First Page

1588

Last Page

1628

ISSN

1380-6653

Identifier

10.1007/s11142-018-9466-y

Publisher

Springer Verlag (Germany)

Copyright Owner and License

Authors

Additional URL

https://doi.org/10.1007/s11142-018-9466-y

Download

Share

COinS