Transparency, Tax Pressure and Access to Finance

Andrew Ellul, Tullio Jappelli (), Marco Pagano and Fausto Panunzi
Additional contact information
Andrew Ellul: Indiana University
Fausto Panunzi: Università Bocconi, CEPR and ECGI

CSEF Working Papers from Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy

Abstract: In choosing transparency, firms must trade off the benefits from better access to finance against the cost of a greater tax burden. We study this trade-off in a model with distortionary taxes and endogenous rationing of external finance. The evidence from two different data sets, one formed only by listed firms and another mainly by unlisted firms, bears out the model’s predictions: First, transparency is negatively correlated with tax pressure, particularly in sectors where firms are less dependent on external finance. Second, financial development enhances the positive effect of transparency on investment, and encourages transparency by financially dependent firms. Finally, investment and access to finance are positively correlated with firms’ transparency, especially in firms that depend more on external finance, and are negatively correlated with tax pressure. JEL Classification: G31, G32, G38, H25, H26, M40.

Keywords: transparency; tax pressure; investment; access to finance. (search for similar items in EconPapers)
Date: 2012-04-11, Revised 2015-02-04
New Economics Papers: this item is included in nep-iue
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Citations: View citations in EconPapers (9)

Published in Review of Finance, 2016, January, vol. 20, pp. 37-76

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Related works:
Journal Article: Transparency, Tax Pressure, and Access to Finance (2016)
Working Paper: Transparency, Tax Pressure and Access to Finance (2012)
Working Paper: Transparency, tax pressure and access to finance (2012)
Working Paper: Transparency, Tax Pressure and Access to Finance (2012)
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