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Perceptions of unreported economic activities in Baltic Firms. Individualistic and non-individualistic motives

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  • Jaanika Meriküll

    ()

  • Tairi Rõõm

    ()

  • Karsten Staehr

    ()

Abstract

This paper analyses managerial dishonesty in the form of economic activity not reported to the authorities. We employ data from a survey of Baltic firm managers, who were asked to assess the prevalence of unreported profits, employment and wages in their industry and to give their views on a range of questions related to various reasons for dishonest behaviour. Unreported economic activities are perceived to be widespread, although their extent and composition vary across the three countries. We employ a principal component analysis of the survey answers and identify three clusters capturing both individualistic and nonindividualistic motives for dishonest behaviour: 1) reciprocity towards government; 2) rational choice related motives; and 3) norms towards society as proxied by the tolerance of illegal activities. The econometric analysis indicates that all three motives are related to perceptions of unreported activities in the Baltic countries

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Bibliographic Info

Paper provided by Bank of Estonia in its series Bank of Estonia Working Papers with number wp2012-8.

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Date of creation: 04 Feb 2013
Date of revision: 04 Feb 2013
Handle: RePEc:eea:boewps:wp2012-8

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Keywords: unreported economic activity; tax evasion; tax morale; norms; governance; social coherence; Baltic countries;

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