Importing corruption culture from overseas: Evidence from corporate tax evasion in the United States

Jason DeBacker (), Bradley Heim and Anh Tran

Journal of Financial Economics, 2015, vol. 117, issue 1, 122-138

Abstract: We study how cultural norms and enforcement policies influence illicit corporate activities. Using confidential Internal Revenue Service (IRS) audit data, we show that corporations with owners from countries with higher corruption norms evade more tax in the U.S. This effect is strong for small corporations and decreases as the size of the corporation increases. In the mid-2000s, the United States implemented several enforcement measures to increase tax compliance. We find that these enforcement efforts were less effective in reducing tax evasion by corporations whose owners are from corrupt countries. This suggests that cultural norms can be a challenge to legal enforcement.

Keywords: Tax evasion; Corruption; Norms; Legal enforcement (search for similar items in EconPapers)
JEL-codes: D73 H26 M14 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (94)

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Related works:
Working Paper: Importing Corruption Culture from Overseas: Evidence from Corporate Tax Evasion in the United States (2012)
Chapter: Importing Corruption Culture from Overseas: Evidence from Corporate Tax Evasion in the United States (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:117:y:2015:i:1:p:122-138

DOI: 10.1016/j.jfineco.2012.11.009

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