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Diversity of uncertainty and corporate tax avoidance

Author

Listed:
  • Pattanaporn Chatjuthamard

    (Sasin School of Management, Chulalongkorn University)

  • Pandej Chintrakarn

    (Business Administration Division, Mahidol University International College (MUIC))

  • Pornsit Jiraporn

    (Pennsylvania State University- Great Valley School of Graduate Professional Studies)

Abstract

We explore how corporate tax avoidance is influenced by the diversity of uncertainty- a unique dimension of economic policy uncertainty (EPU) that has been surprisingly overlooked. We find that firms facing multiple areas of uncertainty concurrently tend to face heightened risk, prompting them to take precautionary measures and preserve cash through increased tax avoidance strategies. Notably, the effect of EPU diversity on tax avoidance is distinct from the effect of the level of EPU itself. Our study usefully identifies a more nuanced impact of EPU on corporate tax avoidance, offering valuable insights for regulators, policymakers, corporate executives, and investors in general.

Suggested Citation

  • Pattanaporn Chatjuthamard & Pandej Chintrakarn & Pornsit Jiraporn, 2024. "Diversity of uncertainty and corporate tax avoidance," Economics Bulletin, AccessEcon, vol. 44(3), pages 940-947.
    • Handle: RePEc:ebl:ecbull:eb-23-00569
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    References listed on IDEAS

    as
    1. My Nguyen & Justin Hung Nguyen, 2020. "Economic policy uncertainty and firm tax avoidance," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 60(4), pages 3935-3978, December.
    2. Fangjun Wang & Shuolei Xu & Junqin Sun & Charles P. Cullinan, 2020. "Corporate Tax Avoidance: A Literature Review And Research Agenda," Journal of Economic Surveys, Wiley Blackwell, vol. 34(4), pages 793-811, September.
    3. Scott R. Baker & Nicholas Bloom & Steven J. Davis, 2016. "Measuring Economic Policy Uncertainty," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 131(4), pages 1593-1636.
    Full references (including those not matched with items on IDEAS)

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    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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