Tax Evasion and Entrepreneurial Flexibility
The separation between a firmâ€™s decision to evade taxes and its other choices fails to hold if an irreversible investment is introduced. This model applies the well-known Bernankeâ€™s bad news principle, in which auditing is bad news for tax-evading firms. This article thus shows that evasion affects investment, which in turn determines production.
Volume (Year): 28 (2000)
Issue (Month): 3 (May)
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