IDEAS home Printed from https://ideas.repec.org/p/zbw/arqudp/323205.html
   My bibliography  Save this paper

What drives the use of aggressive conforming and nonconforming tax avoidance strategies? New evidence on the tax strategies' substitutive relationship

Author

Listed:
  • Blaufus, Kay
  • Bock, Julian
  • Peuthert, Benjamin

Abstract

Using unique tax audit data of 499 German firms, we analyze whether family firms, public firms, financially constrained firms, and those firms with managers with low tax morale substitute two tax strategies, book-tax conforming and nonconforming tax avoidance strategies, and examine the effect on overall tax avoidance. The empirical results are in line with family firms and those firms with low tax morale managers substituting conforming for nonconforming tax avoidance strategies, whereas public and financially constrained firms do the opposite. Moreover, we find that family firms differ from nonfamily firms only in their strategic implementation but not in the overall amount of tax avoidance. With respect to public, financially constrained firms and those firms with low tax morale managers, we find a positive association with the total level of tax avoidance.

Suggested Citation

  • Blaufus, Kay & Bock, Julian & Peuthert, Benjamin, 2025. "What drives the use of aggressive conforming and nonconforming tax avoidance strategies? New evidence on the tax strategies' substitutive relationship," arqus Discussion Papers in Quantitative Tax Research 296, arqus - Arbeitskreis Quantitative Steuerlehre.
    • Handle: RePEc:zbw:arqudp:323205
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/323205/1/1931362114.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Safa Gaaya & Nadia Lakhal & Faten Lakhal, 2017. "Does family ownership reduce corporate tax avoidance? The moderating effect of audit quality," Managerial Auditing Journal, Emerald Group Publishing Limited, vol. 32(7), pages 731-744, August.
    2. Chen, Shuping & Chen, Xia & Cheng, Qiang & Shevlin, Terry, 2010. "Are family firms more tax aggressive than non-family firms?," Journal of Financial Economics, Elsevier, vol. 95(1), pages 41-61, January.
    3. Tomas Hjelström & Juha-Pekka Kallunki & Henrik Nilsson & Milda Tylaite, 2020. "Executives’ Personal Tax Behavior and Corporate Tax Avoidance Consistency," European Accounting Review, Taylor & Francis Journals, vol. 29(3), pages 493-520, May.
    4. Huang, Henry He & Lobo, Gerald J. & Wang, Chong & Xie, Hong, 2016. "Customer concentration and corporate tax avoidance," Journal of Banking & Finance, Elsevier, vol. 72(C), pages 184-200.
    5. Jonathan S. Feinstein, 1991. "An Econometric Analysis of Income Tax Evasion and its Detection," RAND Journal of Economics, The RAND Corporation, vol. 22(1), pages 14-35, Spring.
    6. Tomasz Mickiewicz & Anna Rebmann & Arnis Sauka, 2019. "To Pay or Not to Pay? Business Owners’ Tax Morale: Testing a Neo-Institutional Framework in a Transition Environment," Journal of Business Ethics, Springer, vol. 157(1), pages 75-93, June.
    7. Kovermann, Jost & Wendt, Martin, 2019. "Tax avoidance in family firms: Evidence from large private firms," Journal of Contemporary Accounting and Economics, Elsevier, vol. 15(2), pages 145-157.
    8. Steijvers, Tensie & Niskanen, Mervi, 2014. "Tax aggressiveness in private family firms: An agency perspective," Journal of Family Business Strategy, Elsevier, vol. 5(4), pages 347-357.
    9. Allison Koester & Terry Shevlin & Daniel Wangerin, 2017. "The Role of Managerial Ability in Corporate Tax Avoidance," Management Science, INFORMS, vol. 63(10), pages 3285-3310, October.
    10. Scott D. Dyreng & Jeffrey L. Hoopes & Jaron H. Wilde, 2016. "Public Pressure and Corporate Tax Behavior," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 54(1), pages 147-186, March.
    11. Alexander Brune & Martin Thomsen & Christoph Watrin, 2019. "Tax avoidance in different firm types and the role of nonfamily involvement in private family firms," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 40(8), pages 950-970, December.
    12. Annette Alstadsæter & Martin Jacob, 2016. "Dividend Taxes and Income Shifting," Scandinavian Journal of Economics, Wiley Blackwell, vol. 118(4), pages 693-717, October.
    13. Erin Henry & Richard Sansing, 2018. "Corporate tax avoidance: data truncation and loss firms," Review of Accounting Studies, Springer, vol. 23(3), pages 1042-1070, September.
    14. Kemme, David M. & Parikh, Bhavik & Steigner, Tanja, 2020. "Tax Morale and International Tax Evasion," Journal of World Business, Elsevier, vol. 55(3).
    15. James Alm & Chandler McClellan, 2012. "Tax Morale and Tax Compliance from the Firm's Perspective," Kyklos, Wiley Blackwell, vol. 65(1), pages 1-17, February.
    16. Benno Torgler & Markus Schaffner & Alison Macintyre, 2007. "Tax Compliance, Tax Morale and Governance Quality," CREMA Working Paper Series 2007-17, Center for Research in Economics, Management and the Arts (CREMA).
    17. Huizinga, Harry & Laeven, Luc, 2008. "International profit shifting within multinationals: A multi-country perspective," Journal of Public Economics, Elsevier, vol. 92(5-6), pages 1164-1182, June.
    18. Kelvin K. F. Law & Lillian F. Mills, 2015. "Taxes and Financial Constraints: Evidence from Linguistic Cues," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 53(4), pages 777-819, September.
    19. Cloyd, CB & Pratt, J & Stock, T, 1996. "The use of financial accounting choice to support aggressive tax positions: Public and private firms," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 34(1), pages 23-43.
    20. Hongbin Cai & Qiao Liu, 2009. "Competition and Corporate Tax Avoidance: Evidence from Chinese Industrial Firms," Economic Journal, Royal Economic Society, vol. 119(537), pages 764-795, April.
    21. Lee, Cheng-Hsun & Bose, Sudipta, 2021. "Do family firms engage in less tax avoidance than non-family firms? The corporate opacity perspective," Journal of Contemporary Accounting and Economics, Elsevier, vol. 17(2).
    22. Guenther, David A. & Maydew, Edward L. & Nutter, Sarah E., 1997. "Financial reporting, tax costs, and book-tax conformity," Journal of Accounting and Economics, Elsevier, vol. 23(3), pages 225-248, November.
    23. repec:eme:maj000:maj-02-2017-1530 is not listed on IDEAS
    24. Bruno S. Frey, 1992. "Tertium Datur: Pricing, Regulating and Intrinsic Motivation," Kyklos, Wiley Blackwell, vol. 45(2), pages 161-184, May.
    25. Faten Lakhal & Safa Gaaya & Nadia Lakhal, 2017. "Does family ownership reduce corporate tax avoidance? The moderating effect of audit quality," Post-Print hal-01686420, HAL.
    26. Mills, LF, 1998. "Book-tax differences and internal revenue service adjustments," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 36(2), pages 343-356.
    27. Safa Gaaya & Nadia Lakhal & Faten Lakhal, 2017. "Does family ownership reduce corporate tax avoidance? The moderating effect of audit quality," Post-Print hal-03562617, HAL.
    28. Clive Lennox & Petro Lisowsky & Jeffrey Pittman, 2013. "Tax Aggressiveness and Accounting Fraud," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 51(4), pages 739-778, September.
    29. Cummings, Ronald G. & Martinez-Vazquez, Jorge & McKee, Michael & Torgler, Benno, 2009. "Tax morale affects tax compliance: Evidence from surveys and an artefactual field experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 70(3), pages 447-457, June.
    30. Benno Torgler, 2007. "Tax Compliance and Tax Morale," Books, Edward Elgar Publishing, number 4096, March.
    31. Jaewoo Kim & Sean T. McGuire & Steven Savoy & Ryan Wilson & Judson Caskey, 2019. "How Quickly Do Firms Adjust to Optimal Levels of Tax Avoidance?†," Contemporary Accounting Research, John Wiley & Sons, vol. 36(3), pages 1824-1860, September.
    32. Hanlon, Michelle & Heitzman, Shane, 2010. "A review of tax research," Journal of Accounting and Economics, Elsevier, vol. 50(2-3), pages 127-178, December.
    33. Desai, Mihir A. & Dharmapala, Dhammika, 2006. "Corporate tax avoidance and high-powered incentives," Journal of Financial Economics, Elsevier, vol. 79(1), pages 145-179, January.
    34. Lillian F. Mills & Richard C. Sansing, 2000. "Strategic Tax and Financial Reporting Decisions: Theory and Evidence," Contemporary Accounting Research, John Wiley & Sons, vol. 17(1), pages 85-106, March.
    35. Blaufus, Kay & Lorenz, Daniela & Milde, Michael & Peuthert, Benjamin & Schwäbe, Alexander N., 2022. "Negotiating with the tax auditor: Determinants of tax auditors' negotiation strategy choice and the effect on firms’ tax adjustments," Accounting, Organizations and Society, Elsevier, vol. 97(C).
    36. Jennifer Blouin, 2014. "Defining and Measuring Tax Planning Aggressiveness," National Tax Journal, National Tax Association;National Tax Journal, vol. 67(4), pages 875-900, December.
    37. Blaufus, Kay & Hundsdoerfer, Jochen & Jacob, Martin & Sünwoldt, Matthias, 2016. "Does legality matter? The case of tax avoidance and evasion," Journal of Economic Behavior & Organization, Elsevier, vol. 127(C), pages 182-206.
    38. Kelvin K. F. Law & Lillian F. Mills, 2017. "Military experience and corporate tax avoidance," Review of Accounting Studies, Springer, vol. 22(1), pages 141-184, March.
    39. Benno Torgler & Markus Schaffner & Alison Macintyre, 2007. "Tax Compliance, Tax Morale and Governance Quality," CREMA Working Paper Series 2007-17, Center for Research in Economics, Management and the Arts (CREMA).
    40. Richard Cazier & Sonja Rego & Xiaoli Tian & Ryan Wilson, 2015. "The impact of increased disclosure requirements and the standardization of accounting practices on earnings management through the reserve for income taxes," Review of Accounting Studies, Springer, vol. 20(1), pages 436-469, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kovermann, Jost & Velte, Patrick, 2019. "The impact of corporate governance on corporate tax avoidance—A literature review," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 36(C), pages 1-1.
    2. Chalevas, Constantinos & Ntounis, Dimitrios & Vlismas, Orestes, 2025. "The effect of cost asymmetry on future tax avoidance," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 58(C).
    3. Alessandro Cirillo & Maria Angela Manzi & Jonathan Bauweraerts & Salvatore Sciascia, 2025. "Tax Avoidance in Family Business: The Ethical Perspective of CEO Transgenerational Responsibility," Journal of Business Ethics, Springer, vol. 198(4), pages 841-864, May.
    4. Valentino Parisi & Daniela Federici, 2023. "Family Firms’ Aggressive Tax Planning: An Empirical Evaluation for Italy," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 9(3), pages 1299-1327, November.
    5. Chalevas, Constantinos G. & Doukakis, Leonidas C. & Karampinis, Nikolaos I. & Pavlopoulou, Olga-Chara, 2024. "The impact of family ownership on tax avoidance: International evidence," International Review of Financial Analysis, Elsevier, vol. 94(C).
    6. Christofer Adrian & Mukesh Garg & Anh Viet Pham & Soon-Yeow Phang & Cameron Truong, 2023. "Do Natural Disasters Affect Corporate Tax Avoidance? The Case of Drought," Journal of Business Ethics, Springer, vol. 186(1), pages 105-135, August.
    7. Kovermann, Jost & Wendt, Martin, 2019. "Tax avoidance in family firms: Evidence from large private firms," Journal of Contemporary Accounting and Economics, Elsevier, vol. 15(2), pages 145-157.
    8. Lee, Cheng-Hsun & Bose, Sudipta, 2021. "Do family firms engage in less tax avoidance than non-family firms? The corporate opacity perspective," Journal of Contemporary Accounting and Economics, Elsevier, vol. 17(2).
    9. Chen, Jie & Mishra, Tapas & Song, Wei & Zhang, Qingjing & Zhang, Zhuang, 2024. "The impact of bank mergers on corporate tax aggressiveness," Journal of Corporate Finance, Elsevier, vol. 84(C).
    10. Yukun Pan & Lin Liao & Daifei Yao & Joseph H. Zhang, 2024. "Board Chairs’ Early-Life Experience and Tax Avoidance," Journal of Business Ethics, Springer, vol. 192(4), pages 897-917, July.
    11. Chii-Shyan Kuo, 2022. "Family firms, tax avoidance, and socioemotional wealth: evidence from tax reform in Taiwan," Review of Quantitative Finance and Accounting, Springer, vol. 58(4), pages 1535-1572, May.
    12. Sabrine Hamrouni & Ines Menchaoui, 2025. "The Impact of Tax Audits on Tax Avoidance Levels: The Moderating Role of Audit Quality," Journal of Accounting and Management Information Systems, Faculty of Accounting and Management Information Systems, The Bucharest University of Economic Studies, vol. 24(2), pages 254-271, June.
    13. Callahan, Carolyn M. & Plečnik, James M. & Ryou, Jiwoo, 2024. "Do competitive markets encourage tax aggressiveness?," Advances in accounting, Elsevier, vol. 66(C).
    14. Luca Menicacci & Lorenzo Simoni, 2024. "Negative media coverage of ESG issues and corporate tax avoidance," Sustainability Accounting, Management and Policy Journal, Emerald Group Publishing Limited, vol. 15(7), pages 1-33, February.
    15. Shi, Hanzhong & Wu, Kaishu & Zhai, Kerui, 2025. "Employee education and corporate tax outcomes: Evidence from firm-level reporting," Advances in accounting, Elsevier, vol. 68(C).
    16. Tan, Xue & Yin, Jingwei & Lin, Ning, 2025. "The unforgettable past: The long-term impact of war on corporate tax avoidance in modern China," Research in International Business and Finance, Elsevier, vol. 77(PA).
    17. Juan Monterrey Mayoral & Amparo Sánchez Segura, 2015. "Planificación fiscal y Gobierno Corporativo en las empresas cotizadas españolas," Hacienda Pública Española / Review of Public Economics, IEF, vol. 214(3), pages 55-89, September.
    18. Brooks, Chris & Godfrey, Chris & Hillenbrand, Carola & Money, Kevin, 2016. "Do investors care about corporate taxes?," Journal of Corporate Finance, Elsevier, vol. 38(C), pages 218-248.
    19. Feng Huang & Jie Gao, 2022. "Customer and Tax Avoidance: How Does Customer Geographic Proximity Affect a Supplier’s Tax Avoidance?," Sustainability, MDPI, vol. 14(22), pages 1-30, November.
    20. Mansoor Afzali & Timmy Thor, 2025. "Corporate culture and tax planning," Review of Quantitative Finance and Accounting, Springer, vol. 64(2), pages 861-898, February.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    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:zbw:arqudp:323205. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: http://www.arqus.info/ .

    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.