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A Real Option Approach to Sustainable Corporate Tax Behavior

Author

Listed:
  • Anne Van de Vijver

    (Faculty of Law and Antwerp Tax Academy, University of Antwerp, Venusstraat 23, 2000 Antwerp, Belgium)

  • Danny Cassimon

    (Institute of Development Policy, and Antwerp Tax Academy, University of Antwerp, Prinsstraat 13, 2000 Antwerp, Belgium)

  • Peter-Jan Engelen

    (School of Economics, Utrecht University, Kriekenpitplein 21-22, 3584 EC Utrecht, The Netherlands
    Faculty of Business and Economics, University of Antwerp, Prinsstraat 13, 2000 Antwerp, Belgium)

Abstract

Aggressive tax planning has become a sustainability problem, as governments have to cope with less tax revenue, which is crucial for investments in sustainable development goals. The OECD and the EU authorities have taken several initiatives against aggressive tax planning, such as the Action Plan against BEPS. However, these initiatives lack effectiveness, and aggressive tax planning is still omnipresent. We analyze the fight against aggressive corporate tax planning from a Real Option Theory perspective, in order to find an explanation for the difficult shift of companies’ aggressive tax planning strategies to more sustainable tax behavior. The Real Option Theory shows that, as long as the option to ‘delay’ the investment in sustainable tax behavior has too much value because the benefits of such investment are uncertain, companies will wait. Based on this new understanding, we suggest additional public policy interventions against aggressive tax planning. These interventions aim directly at reducing this real option value (of waiting).

Suggested Citation

  • Anne Van de Vijver & Danny Cassimon & Peter-Jan Engelen, 2020. "A Real Option Approach to Sustainable Corporate Tax Behavior," Sustainability, MDPI, vol. 12(13), pages 1-17, July.
    • Handle: RePEc:gam:jsusta:v:12:y:2020:i:13:p:5406-:d:380207
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    References listed on IDEAS

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    Cited by:

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    2. Aleksandra Hlastec & Damijan Mumel & Lidija Hauptman, 2023. "Is There a Relationship between Self-Enhancement, Conservation and Personal Tax Culture?," Sustainability, MDPI, vol. 15(7), pages 1-23, March.
    3. Beata Holkova & Eva Malichova & Lukas Falat & Lucia Pancikova, 2023. "Determinants of Tax Ethics in Society: Statistical and Logistic Regression Approach," Mathematics, MDPI, vol. 11(10), pages 1-21, May.
    4. Inna Khovrak & Dariia Vovk, 2020. "Tax Planning in the System of Accounting and Management Information Space," Oblik i finansi, Institute of Accounting and Finance, issue 4, pages 75-81, December.
    5. Anne Vijver, 2022. "Morality of Lobbying for Tax Benefits: A Kantian Perspective," Journal of Business Ethics, Springer, vol. 181(1), pages 57-68, November.

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