The Strength of Audits, Reporting Standards and Corruption, on Tax Evasion: A Cross-Country Study
Raga Hudori and
International Journal of Economics & Business Administration (IJEBA), 2020, vol. VIII, issue 2, 554-567
Purpose: The study aims to examine the influence of audits, reporting standards and corruption on tax evasion on selected countries. Design/Methodology/Approach: Tax evasion is measured using the shadow economy estimation and a tax evasion survey from the IMD World Competitiveness Yearbook by using a sample of 132 countries in th eperiod 2008-2015. Data were analyzed using Ordinary Least Square regression (OLS) and multilevel mediation analysis. Findings: The results showed that improving audit quality and reporting standards reducing the level of corruption can significantly reduce tax evasion. We also find that corruption mediates the effect of the strength of audit and reporting standards on tax evasion. Practical Implications: Result implies that in order to reduce tax evasion, the government must reduce the level of corruption first through strengthening audits and reporting standards. At the end, it is hoped that no more corrupted officials will facilitate the company to manipulate financial statements. Originality/Value: This research provides a clearer view by building a conceptual framework on how corruption mediates the effect of audit power and reporting standards on tax evasion.
Keywords: Strength of audit and reporting standards; corruption; tax evasion. (search for similar items in EconPapers)
JEL-codes: H26 M48 D73 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:ers:ijebaa:v:viii:y:2020:i:2:p:554-567
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