Transparency, Tax Pressure and Access to Finance

Marco Pagano, Tullio Jappelli (), Fausto Panunzi and Andrew Ellul

No 8939, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: In choosing transparency, firms must trade off the benefits from better access to finance against the cost of a greater tax burden. We study this trade-off in a model with distortionary taxes and endogenous rationing of external finance. The evidence from two different data sets, one formed only by listed firms and another mainly by unlisted firms, bears out the model?s predictions: First, investment and access to finance are positively correlated with accounting transparency, especially in firms that depend more on external finance, and are negatively correlated with tax pressure. Second, transparency is negatively correlated with tax pressure, particularly in sectors where firms are less dependent on external finance, and is positively correlated with tax enforcement. Finally, financial development enhances the positive effect of transparency on investment, and encourages transparency by financially dependent firms.

Keywords: Access to finance; Tax pressure; transparency (search for similar items in EconPapers)
JEL-codes: G31 G32 G38 H25 H26 (search for similar items in EconPapers)
Date: 2012-04
New Economics Papers: this item is included in nep-acc and nep-iue
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Related works:
Journal Article: Transparency, Tax Pressure, and Access to Finance (2016)
Working Paper: Transparency, Tax Pressure and Access to Finance (2015)
Working Paper: Transparency, tax pressure and access to finance (2012)
Working Paper: Transparency, Tax Pressure and Access to Finance (2012)
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