Dunker, Mathias
(2021).
Essays on Tax Regulations and Firm Responses.
PhD thesis, Universität zu Köln.
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Dissertation Mathias Dunker.pdf - Accepted Version Download (3MB) | Preview |
Abstract
This thesis expands the understanding of firm responses on current tax regulations such as tax transparency requirements and anti-tax avoidance measures. In particular, the thesis provides knowledge on the effects and determinants of qualitative tax disclosures of firms and the effectiveness of tools in the fight against tax avoidance. The four independent essays of the thesis provide novel insights into current topics in tax research that might be of particular interest for policymakers in order to combat global tax avoidance and, more broadly, to enhance tax legislation. Chapter 2 addresses the research question of what qualitative and voluntary tax disclosures effectively signal and if these disclosures can be attributed to an amendment of tax affairs or if managers only provide boilerplate information. For this purpose, we seek annual reports of large European firms for information on tax risks and find a remarkable increase of tax risk disclosures since 2005. Based on this disclosure phenomenon, we find significantly lower effective tax rates [ETRs] and ETR volatilities for firms that initially provide information on tax risks relative to firms that abstain from any tax risk disclosure. Our results suggest that tax risk disclosures signal a more refined tax management and a professionalized approach towards tax risks. Chapter 3 examines the determinants and effects of qualitative and public tax strategy disclosures. For financial years ending December 31, 2017, large U.K. based firms and certain multinational enterprises are obliged to publicly disclose information about their tax strategy, including their attitude towards tax planning. Empirical results suggest that tax-avoiding firms provide poor tax strategies by deliberately omitting information. This result confirms prior literature finding that managers systematically avoid disclosures of unpleasant tax information. Moreover, we find a significant increase in ETRs of affected firms after the regulation came into effect relative to unaffected peers. We reason that qualitative and publicly available information about firms’ tax strategies can serve as an adequate instrument for policymakers to effectively deter tax avoidance. Chapter 4 provides insights into the effects of the U.S. tax reform of 2017 on cross-border M&As. In particular, we scrutinize if and how the shift to a territorial tax system and the implementation of an anti-abuse measure, denoted as GILTI provision, affect cross-border acquisition patterns of U.S. firms. Empirical results demonstrate a reduced probability for GILTI-affected U.S. firms to invest in low-tax and tax haven countries following the TCJA. Our finding that the GILTI anti-abuse provision effectively deters investments in low-tax jurisdictions is of particular importance because the U.S. administration under Joe Biden is considering to expand the GILTI regime significantly. Chapter 5 studies a current process within a tax consulting firm and aims at gaining knowledge on the relevance and potentials to digitize this process. I conduct interviews with employees of a large tax consulting firm and find out that the review process of trade tax assessment notices is not an overly extensive process within the tax declaration function, despite the long-winded and complex taxation procedure. Nonetheless, my results suggest that a digitally supported review of tax assessment notices is a promising approach to streamline the review process.
| Item Type: | Thesis (PhD thesis) | ||||||||
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| URN: | urn:nbn:de:hbz:38-545839 | ||||||||
| Date: | 2021 | ||||||||
| Place of Publication: | Köln | ||||||||
| Language: | English | ||||||||
| Faculty: | Faculty of Management, Economy and Social Sciences | ||||||||
| Divisions: | Faculty of Management, Economics and Social Sciences > Business Administration > Accounting and Taxation > Professorship for Business Administration and Business Taxation | ||||||||
| Subjects: | Economics Management and auxiliary services |
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| Date of oral exam: | 20 December 2021 | ||||||||
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| Refereed: | Yes | ||||||||
| URI: | http://kups.ub.uni-koeln.de/id/eprint/54583 |
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