What drives the use of aggressive conforming and nonconforming tax avoidance strategies? New evidence on the tax strategies' substitutive relationship

Kay Blaufus, Julian Bock and Benjamin Peuthert

No 296, arqus Discussion Papers in Quantitative Tax Research from arqus - Arbeitskreis Quantitative Steuerlehre

Abstract: Using unique tax audit data of 499 German firms, we analyze whether family firms, public firms, financially constrained firms, and those firms with managers with low tax morale substitute two tax strategies, book-tax conforming and nonconforming tax avoidance strategies, and examine the effect on overall tax avoidance. The empirical results are in line with family firms and those firms with low tax morale managers substituting conforming for nonconforming tax avoidance strategies, whereas public and financially constrained firms do the opposite. Moreover, we find that family firms differ from nonfamily firms only in their strategic implementation but not in the overall amount of tax avoidance. With respect to public, financially constrained firms and those firms with low tax morale managers, we find a positive association with the total level of tax avoidance.

Keywords: conforming tax avoidance; tax planning; nontax costs; book-tax conformity (search for similar items in EconPapers)
JEL-codes: G32 H26 M41 (search for similar items in EconPapers)
Date: 2025
New Economics Papers: this item is included in nep-acc, nep-pbe and nep-sbm
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