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The Influence of Guilt Cognitions on Taxpayers’ Voluntary Disclosures

Paul Dunn (), Jonathan Farrar () and Cass Hausserman ()
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Paul Dunn: Brock University
Jonathan Farrar: Ryerson University
Cass Hausserman: Portland State University

Journal of Business Ethics, 2018, vol. 148, issue 3, 689-701

Abstract: Abstract Guilt is a powerful emotion that is known to influence ethical decision-making. Nevertheless, the role of guilt cognitions in influencing restorative behaviour following an unethical action is not well understood. Guilt cognitions are interrelated beliefs about an individual’s role in a negative event. We experimentally investigate the joint impact of three guilt cognitions—responsibility for a decision, justification for a decision, and foreseeability of consequences—on a taxpayer’s decision to make a tax amnesty disclosure. Tax amnesties encourage delinquent taxpayers to self-correct to avoid severe penalties that would result if their tax evasion were discovered. Our findings suggest a three-way interaction effect such that taxpayers are likely to make tax amnesty disclosures when they foresee that they will be caught by the tax authority, unless they can diffuse responsibility for their evasion and justify their evasion. Implications for tax policy and tax professionals are discussed.

Keywords: Guilt; Guilt cognitions; Tax amnesty; Tax evasion; Tax compliance (search for similar items in EconPapers)
Date: 2018
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