Postmaterialism and Corporate Tax Avoidance

Yujia Cui, Jiwei Wang and Kangtao Ye
Additional contact information
Yujia Cui: Beijing Institute of Technology, Beijing 100081, P. R. China
Jiwei Wang: Singapore Management University, Singapore 188065, Singapore
Kangtao Ye: Renmin University of China, Beijing 100872, P. R. China

The International Journal of Accounting (TIJA), 2023, vol. 58, issue 01, 1-42

Abstract: SynopsisThe research problemThis paper explores the association between postmaterialistic culture and corporate tax-avoidance behavior.MotivationAlthough corporate tax avoidance is prevalent, the degree of tax avoidance varies across countries. Previous studies have suggested that national culture is associated with the level of tax avoidance (e.g., corruption culture in [DeBacker, J., Heim, B. T., & Tran, A. (2015). Importing corruption culture from overseas: Evidence from corporate tax evasion in the United States. Journal of Financial Economics, 117(1), 122–138. https://doi.org/10.1016/j.jfineco.2012.11.009], and societal trust in [Kanagaretnam, K., Lee, J., Lim, C. Y., & Lobo, G. J. (2018). Societal trust and corporate tax avoidance. Review of Accounting Studies, 23(4), 1588–1628. https://doi.org/10.1007/s11142-018-9466-y], among others). Unlike prior studies focusing on longstanding cultural factors, this paper examined the association between corporate tax avoidance and an important current culture trend, i.e., postmaterialistic culture.The test hypothesesThere is no association between postmaterialistic culture and corporate tax avoidance.Target populationVarious stakeholders that care about corporate tax avoidance including the government, policymakers, investors, auditors, and firm managers.Adopted methodologyLinear Probability Model and Ordinary Least Squares regressions.AnalysesWe examined the association between postmaterialistic culture and corporate tax-avoidance behavior. We used a proprietary dataset of China tax audits spanning the 2011–2014 period and tested the moderating effect of tax enforcement. We also examined the external validity of our results using a cross-country sample from 21 countries over the 1993–2014 period.FindingsUsing a proprietary dataset of China tax audits, we found that firms owned by investors from countries with higher postmaterialism values were less likely to engage in tax-avoidance behavior in China. In addition, we found some evidence that the negative association between postmaterialism and tax avoidance is more pronounced when tax enforcement is stronger, indicating that national culture and formal institutions act as complements. To check the external validity of our main results, we further used a cross-country sample from 21 countries over 22 years. The evidence from the cross-country sample was consistent with the findings obtained from the China tax audits setting.

Keywords: Postmaterialism; culture; tax avoidance; tax enforcement; China; cross-country (search for similar items in EconPapers)
JEL-codes: H26 M41 Z19 (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.worldscientific.com/doi/abs/10.1142/S1094406023500026
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wsi:tijaxx:v:58:y:2023:i:01:n:s1094406023500026

Ordering information: This journal article can be ordered from

DOI: 10.1142/S1094406023500026

Access Statistics for this article

The International Journal of Accounting (TIJA) is currently edited by A. Rashad Abdel-khalik

More articles in The International Journal of Accounting (TIJA) from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().