How to Prevent Time Preference Risk: Evidence from Tax Avoidance

Jing-Wen Chang, Huang-Ping Yen and Sijia Luo

Emerging Markets Finance and Trade, 2022, vol. 58, issue 15, 4247-4260

Abstract: This paper investigates whether future time reference in languages affects corporate tax avoidance. Consisting of 265,652 firm-year observations, we cover 42 countries during the 1989 to 2020 periods. The results show that those firms have relatively low cash effective tax rates when their country’s language does not distinguish grammatically between future and present events. Thus, adopting IFRS accounting and the local legal environment could moderate this condition. Our findings remain after considering endogeneity problems and implementing a series of robustness tests. Moreover, we provide additional evidence regarding the effects of formal institutions on tax avoidance and a new approach for regulators to encourage tax compliance and evaluate their local legal environments to more effectively reducing financial risk.

Date: 2022
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/1540496X.2022.2094760 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mes:emfitr:v:58:y:2022:i:15:p:4247-4260

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/MREE20

DOI: 10.1080/1540496X.2022.2094760

Access Statistics for this article

More articles in Emerging Markets Finance and Trade from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().