Tax Evasion and Entrepreneurial Flexibility

Paolo Panteghini

Public Finance Review, 2000, vol. 28, issue 3, 199-209

Abstract: The separation between a firm’s decision to evade taxes and its other choices fails to hold if an irreversible investment is introduced. This model applies the well-known Bernanke’s bad news principle, in which auditing is bad news for tax-evading firms. This article thus shows that evasion affects investment, which in turn determines production.

Date: 2000
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Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:pubfin:v:28:y:2000:i:3:p:199-209

DOI: 10.1177/109114210002800303

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