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Determinants of unreported income in Latin American companies: a business perspective

Author

Listed:
  • Florencia Verónica Pedroni
  • Anahí Briozzo
  • Gabriela Pesce

Abstract

This study aims to empirically identify factors associated with unreported income in Latin American registered firms. We use World Bank Enterprise Survey 2017 data from Argentina, Bolivia, Ecuador, Paraguay, Peru, and Uruguay. We find that the propensity of a company to underreport income increases when corruption, taxes, bureaucracy, regulation, justice, access to finance, and sector informality are considered an obstacle to business operations; when firms are smaller, from the commercial sector, domestic owned, sell mainly in national markets, have at least one female owner or are from Bolivia. Otherwise, this probability decreases for companies that have certified financial statements or international quality certifications, and when political instability represents the greatest difficulty. This article provides updated information of business informality determinants in Latin America with very recent data from six countries, which is an opportunity to design specific development policies in the region.

Suggested Citation

  • Florencia Verónica Pedroni & Anahí Briozzo & Gabriela Pesce, 2022. "Determinants of unreported income in Latin American companies: a business perspective," International Journal of Economic Policy in Emerging Economies, Inderscience Enterprises Ltd, vol. 16(1), pages 58-83.
    • Handle: RePEc:ids:ijepee:v:16:y:2022:i:1:p:58-83
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