IDEAS home Printed from https://ideas.repec.org/a/spr/annopr/v334y2024i1d10.1007_s10479-022-05113-4.html
   My bibliography  Save this article

Dynamic history-dependent tax and environmental compliance monitoring of risk-averse firms

Author

Listed:
  • Noam Goldberg

    (Bar-Ilan University)

  • Isaac Meilijson

    (Tel Aviv University)

  • Yael Perlman

    (Bar-Ilan University)

Abstract

Firms may misreport income or fail to comply with environmental regulations. This study contributes to the growing literature that analyzes dynamic history-dependent compliance monitoring, under which penalties or monitoring frequency are selected on the basis of recent compliance history. The current study develops methods for evaluating and comparing explicit solutions under given monitoring costs and income distributions, using a commonplace utility-penalty scenario under which firms never comply fully with regulations if statically monitored (regardless of their income distribution), but find it to their benefit, if dynamically monitored, to comply fully when their income is sufficiently high. In most examples tried, dynamic monitoring is superior even when constrained to monitor all firms at rates below the optimal static rate. The model is applied to actual IRS 2010 tax-report monitoring and compliance data partitioned by income bracket. This allows, in particular, to deduce degrees of risk aversion.

Suggested Citation

  • Noam Goldberg & Isaac Meilijson & Yael Perlman, 2024. "Dynamic history-dependent tax and environmental compliance monitoring of risk-averse firms," Annals of Operations Research, Springer, vol. 334(1), pages 469-495, March.
    • Handle: RePEc:spr:annopr:v:334:y:2024:i:1:d:10.1007_s10479-022-05113-4
    DOI: 10.1007/s10479-022-05113-4
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10479-022-05113-4
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10479-022-05113-4?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:annopr:v:334:y:2024:i:1:d:10.1007_s10479-022-05113-4. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.