Research Snapshots

Tax evasion: Who is doing it?

Tax evasion is a widespread phenomenon across the globe and even an important factor in the recent European sovereign debt crisis. Professor Yue Ma, the Head of the Department of Economics and Finance, has co-authored a study on this subject of perennial interest. He shows that firms in countries with better credit information-sharing systems and higher banking branch penetration evade taxes to a lesser degree. The effect is stronger for smaller firms, firms in smaller cities and towns, firms in industries relying more on external financing, and those in industries and countries with greater growth potential. The effect is robust to instrumental variable analysis, controlling for firm fixed effects in a smaller panel data set of countries, and many other robustness tests.

Read more:
Beck, Thorsten, Chen Lin, and Yue Ma. "Why Do Firms Evade Taxes? The Role of Information Sharing and Financial Sector Outreach." The Journal of Finance 69.2 (2014): 763-817. Print.