Tax avoidance that reduces transfers from shareholders to the government is traditionally viewed as value enhancing to shareholders. The agency perspective of tax avoidance, however, suggests that opportunistic managers may exploit the obfuscatory nature of tax avoidance to mask rent extraction. To shed light on these conflicting views, I use a self-constructed opacity index and multiple measures of tax avoidance to examine how corporate transparency relates to tax avoidance. I find that more transparent firms, which potentially have less severe agency problems, avoid more tax relative to their opaque counterparts. This result suggests that in a large section of the economy, tax avoidance is mainly engaged in by managers to enhance shareholder wealth. Further, I find that investors place a value premium on tax avoidance, but the price premium decreases with corporate opacity. This is consistent with the notion that corporate transparency facilitates the monitoring of managerial actions and thus alleviates outside investors’ concern with the hidden agency costs associated with tax avoidance. / text

This study examines the relation between employee whistleblowing allegations and firms’ subsequent tax and financial reporting behavior. I draw on economic theory to develop expectations for and test firms’ tax and financial reporting responses to whistleblowing reports of corporate financial misconduct. I employ a difference-in-difference research design to test whether firm’s subject to employee whistleblowing allegations related to financial misconduct exhibit significantly less misreporting risk and tax avoidance in the period following the allegations relative to a control group of firms not subject to whistleblowing allegations. Using a unique sample of whistleblowing cases obtained from the U.S. government, I find that firms subsequently engage in significantly less aggressive financial reporting behavior and have significant increases in their effective tax rates following whistleblowing allegations. This study contributes to the literature by providing evidence on firms’ tax and financial reporting responses to employee whistleblowing and by highlighting the role that employees play in both tax and financial reporting oversight. In light of regulators’ recently heightened emphasis on whistleblower programs, the results of this study should be of interest to regulators, researchers, auditors, and investors.

Mr John George Russell holds a special place in New Zealand’s relatively brief tax history. He is a person who has challenged Inland Revenue’s authority and the taxing statutes more than any other individual. If Mr Russell had followed his father’s early advice and studied engineering he may have taken over the family farm on the outskirts of Hamilton and by now have been enjoying a peaceful retirement. Instead, his enjoyment of the accounting subjects taken at college, which he had enrolled into in error, ultimately led him to becoming a leading figure in the development of the then emerging New Zealand money market, and the managing director of the merchant bank Securitibank. Novel approaches to commercial issues and tenacity in litigation are the trademarks of Mr Russell, Auckland tax advisor and business consultant. Mr Russell is well known in New Zealand tax circles as the creator and defender of the ‘Russell tax template’, developed in the 1980s as a mechanism to turn the ‘water’ of taxable receipts into the ‘wine’ of untaxed gains. Template related issues are still being litigated some three decades later. There have been many cases related to the template covering both substantive and procedural issues. Mr Russell has had limited success on procedural grounds claiming his wins have been the result of good luck more than anything else. He strongly claims Inland Revenue have run a vendetta against him for many years. Inland Revenue have taken several different ‘Tracks’ when assessing various parties it considered received the tax advantage from the template. The ‘Tracks’ used to assess various parties are also regarded by Mr Russell as a vendetta tactic. Ultimately the litigation has led to ‘Track E’ with Inland Revenue personally assessing Mr Russell for tax, penalties and interest totalling in excess of NZD $200 million (underlying core tax of $15 million). A Court of Appeal decision found for Inland Revenue and confirmed Mr Russell’s personal tax assessment. Leave to the Supreme Court was not granted and Mr Russell has recently commented that a ‘Track F’ may now exist. Mr Russell has accused the Commissioner of Inland Revenue of fraud in respect of backdated assessments, and Inland Revenue have accused Mr Russell of fraud in relation to backdated documents. Mr Russell commented during one of our interviews when challenged about document backdating that “the only difference between an honest person and a dishonest one is often a date.” This thesis attempts to provide the reader with not only an overview of the litigation associated with Mr Russell, but also seeks to provide an insight into the person of Mr Russell. The Russell tax template was held to be a tax avoidance structure by the Privy Council in 2001. I did not intend to debate the merits of the Russell template with Mr Russell. One of the least known postures of Inland Revenue’s Compliance Model is that of the ‘game player’. It would appear that Mr Russell has many tendencies attributed to a person classified under this framework to be a classic game player. This thesis attempts to provide an in-depth overview of perhaps Inland Revenue’s most litigious taxpayer and asks whether Inland Revenue are now on ‘track’ to a conclusion. This thesis considers Mr Russell’s contribution to tax jurisprudence by looking at his journey over the last 30 years, giving the reader an insight into the life of Mr Russell.

In June 2007, the Court of Appeal in New Zealand disallowed the taxpayers appeal and decided that Trinity Scheme is a tax avoidance arrangement. The decision is significant not only for NZD3billion which is at stake but also for its jurisprudence on tax avoidance. This paper analyses the implication of Accent decision on the development of judicial approach on tax avoidance. Purposive approach of interpretation is codified in New Zealand since mid-19th century. Although New Zealand courts are not reluctant in using purposive approach in judicial reasoning, the final decisions rarely depart from literal meaning of the Act. The tension between general anti-avoidance provision and the specific provision within the Act has long been recognised by the court. The Court of Appeal in Accent proposed a judicial technique which would involve seeing tax avoidance cases in three different categories.

This paper examines the relative valuation of alternative methods of tax avoidance. Prior studies find that firm value is positively associated with overall measures of tax avoidance; I extend this research by providing evidence that investors distinguish between methods of tax reduction in their valuation of tax avoidance. The impact of tax avoidance on firm value is a function of tax risk, permanence of tax savings, tax planning costs, implicit taxes and contrasts in disclosures of tax reduction in the financial statements. My empirical results suggest that tax avoidance resulting from stock option tax benefits is positively associated with firm value, accelerated depreciation is not associated with firm value and deferral of residual tax on foreign earnings is negatively associated with firm value. Prior studies that find the positive association between firm value and tax avoidance is attenuated in poorly governed firms suggest the discount results from investor concern of managerial opportunism. Self-serving managers conceal diversion of tax savings from investors under the pretext that aggressive tax positions must be hidden from tax authorities in the financial statements. Under this theory transparent tax reduction methods that are clearly supported by the law should not be discounted by investors of poorly governed firms. However, I find that tax avoidance resulting from transparent stock option tax deductions is discounted in poorly governed firms, while tax avoidance derived from opaque deferral of the residual tax on foreign earnings is not, inconsistent with investors believing that managers are exploiting the compromised information environment associated with complex tax transactions. / Ph. D.

This study investigates the association between CEO severance agreements and corporate tax avoidance. Severance agreements, by providing executives with additional compensation when there is a change in employment status, should serve to encourage additional risk-taking, as reflected by increased tax avoidance activities. Using a large sample of aggregate compensation data, I find some evidence of a relation between the presence of a CEO severance agreement and tax avoidance. Using a smaller sample of hand-collected data, I find a significant negative relation between the magnitude of cash severance pay and tax avoidance and a significant positive relation between the magnitude of equity severance pay and tax avoidance. Overall, this study provides evidence that the structure and magnitude of severance agreements are related to tax avoidance. / Ph. D.

In modern society, there is a generally accepted notion that corporations should be socially responsible, but there is much disagreement over what exactly "social responsibility" means. The primary area of disagreement concerns whether or not firms have a duty to consider non-owner stakeholders in their decision-making process. This paper addresses the need to quantify the benefits of socially responsible activities that provide financial returns to shareholders while still addressing the needs of non-owner stakeholders. It investigates the extent to which the reputational effects of corporate social responsibility lead to increased effectiveness of corporate lobbying expenditures, as measured by effective tax rates. This interactive effect creates a tangible economic benefit for firms, and ultimately their owners, providing an opportunity for firms to address the interests of both non-owners and owners. I expect, and find, that firms that are more socially responsible get a higher return on their lobbying expenditures than firms that are less socially responsible, reflected in lower effective tax rates. This result suggests that the competing viewpoints of the stakeholder and shareholder theories may not be as diametrically opposed as prior literature has suggested. The financial benefits that can be gained from being socially responsible may result in bottom-line profits to the shareholders, while still addressing the needs and desires of non-owner stakeholders. / Ph. D.

Tax avoidance is attracting more and more attention from the public. Different people have different understanding and definitions of tax avoidance. The purpose of this thesis is to review the causes of, and solutions to tax avoidance. The thesis assesses various definitions of tax avoidance, and then discusses different options for prevention of tax avoidance. In discussing of legislative rules, the thesis reviews the various applicable sections in the New Zealand Income Tax Act 2004, taking into account of leading cases, discusses the development in other jurisdictions, and in particular examines the development of Generally Anti-avoidance Rules in three jurisdictions. The thesis recommends the key elements for design a good tax system which will help to restrict the conditions that make tax avoidance possible for the future development. The recommendations also include: establishing effective disclosure and advanced rulings system, improving specific anti-avoidance provision, reinforcing generally anti-avoidance rule and developing a purposive interpretation of the law.

Tax avoidance is attracting more and more attention from the public. Different people have different understanding and definitions of tax avoidance. The purpose of this thesis is to review the causes of, and solutions to tax avoidance. The thesis assesses various definitions of tax avoidance, and then discusses different options for prevention of tax avoidance. In discussing of legislative rules, the thesis reviews the various applicable sections in the New Zealand Income Tax Act 2004, taking into account of leading cases, discusses the development in other jurisdictions, and in particular examines the development of Generally Anti-avoidance Rules in three jurisdictions. The thesis recommends the key elements for design a good tax system which will help to restrict the conditions that make tax avoidance possible for the future development. The recommendations also include: establishing effective disclosure and advanced rulings system, improving specific anti-avoidance provision, reinforcing generally anti-avoidance rule and developing a purposive interpretation of the law.

Σύμφωνα με έρευνες που πραγματοποιήθηκαν τα τελευταία χρόνια, παρατηρείται μια αύξηση της φοροδιαφυγής όχι μόνο σε παγκόσμιο επίπεδο αλλά και στον ελληνικό χώρο. Το γεγονός αυτό δείχνει τη δυσαρέσκεια και τη δυσκολία των εταιριών να ανταπεξέλθουν στους υπάρχοντες φορολογικούς νόμους αλλά και την επιδίωξης τους να αυξήσουν τα κέρδη τους με όχι νόμιμο όμως τρόπο. Στην παρούσα εργασία γίνεται ανάλυση του φορολογικού συστήματος στην Ελλάδα και των κινήτρων που ωθούν τις επιχειρήσεις στη φοροδιαφυγή, ενώ διερευνάται η σχέση ανάμεσα στους φορολογικούς ελέγχους χρήσεως και σε άλλα στοιχεία χρηματοοικονομικών καταστάσεων των εταιριών. Βασιζόμενοι σε εμπειρική έρευνα σε ευρύ δείγμα επιχειρήσεων για την τριετία 2008-2010 οδηγούμαστε στο συμπέρασμα ότι το ύψος της φοροδιαφυγής που επικρατεί στην Ελλάδα έχει μεγάλες διαστάσεις και συνδέεται με συγκεκριμένα εταιρικά χαρακτηριστικά. / According to surveys carried out in recent years, there is an increase in tax evasion not only globally but also in the Greek area. This indicates dissatisfaction and difficulty for companies to cope in existing tax laws and the pursuit to increase their profits with no legitimate way though.