Does tax evasion affect firms’ internal control? Some evidence from an experimental approach

Lory Barile ()

Labsi Experimental Economics Laboratory University of Siena from University of Siena

Abstract: The aim of this work is to analyze tax evasion as a factor that potentially affects internal control of firms as an application of the Chen and Chu’s model (2005). For this purpose an experimental approach was employed. Treatments varied depending on whether agents were assumed to be risk-neutral or risk-averse. According to the gift-exchange game (Fehr et al., 1993), results show a positive relationship between wages offered by principal and efforts provided by agents. In general, higher wages lead to more costly effort provision. However, when evasion and risk aversion are introduced in the analysis individuals show opportunistic behaviors and they seem to be less willing to cooperate for the wealth of the firm.

Keywords: tax evasion; firms; reciprocity; labor market. (search for similar items in EconPapers)
JEL-codes: C90 C91 H26 (search for similar items in EconPapers)
Date: 2012-02
New Economics Papers: this item is included in nep-exp, nep-iue and nep-pbe
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Persistent link: https://EconPapers.repec.org/RePEc:usi:labsit:039

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