Diversity of uncertainty and corporate tax avoidance

Pattanaporn Chatjuthamard (), Pandej Chintrakarn () and Pornsit Jiraporn ()
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Pattanaporn Chatjuthamard: Sasin School of Management, Chulalongkorn University
Pandej Chintrakarn: Business Administration Division, Mahidol University International College (MUIC)
Pornsit Jiraporn: Pennsylvania State University- Great Valley School of Graduate Professional Studies

Economics Bulletin, 2024, vol. 44, issue 3, 940 - 947

Abstract: We explore how corporate tax avoidance is influenced by the diversity of uncertainty- a unique dimension of economic policy uncertainty (EPU) that has been surprisingly overlooked. We find that firms facing multiple areas of uncertainty concurrently tend to face heightened risk, prompting them to take precautionary measures and preserve cash through increased tax avoidance strategies. Notably, the effect of EPU diversity on tax avoidance is distinct from the effect of the level of EPU itself. Our study usefully identifies a more nuanced impact of EPU on corporate tax avoidance, offering valuable insights for regulators, policymakers, corporate executives, and investors in general.

Keywords: tax avoidance; EPU; economic policy uncertainty; tax aggressiveness (search for similar items in EconPapers)
JEL-codes: G3 H2 (search for similar items in EconPapers)
Date: 2024-09-30
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