Sabina Kołodziej, Ewa Wanda Maruszewska and Małgorzata Niesiobędzka
This paper aims to present a study on the effect of income and expense shifting on the corporate income tax evasion – an example of intentional noncompliance practiced by tax…
Abstract
Purpose
This paper aims to present a study on the effect of income and expense shifting on the corporate income tax evasion – an example of intentional noncompliance practiced by tax agents. The authors expected that the tool used would differentiate the extent of understatement of tax liability.
Design/methodology/approach
Two experiments were conducted in which young (N = 62) and experienced (N = 68) tax agents read a scenario placing them in a position of an employee responsible for tax planning and calculations of tax liabilities. The respondents’ task was to decide about the extent of the tax liability understatement using income or expense shifting.
Findings
Research demonstrated significantly higher extent of corporate income tax understatement when using income shifting compared to expense shifting in case of experienced tax agents (Study 2) and on tendency level among young tax agents (Study 1).
Research limitations/implications
Results of the studies might be of interest to managers paying attention to tax procedures within the company, governmental agencies investigating corporate tax evasion, as well as educators responsible for tax agents’ initial training and lifelong learning.
Originality/value
This study concentrates on tax agents who are employed in companies and corporate income tax evasion, which has not been analyzed in the literature so far.
Details
Keywords
Ewa Wanda Maruszewska, Małgorzata Niesiobędzka and Sabina Kołodziej
The study aims to investigate the impact of indirectly evoked incentives, in the form of supervisor’s preferences, on the decision about accounting policy regarding depreciation…
Abstract
Purpose
The study aims to investigate the impact of indirectly evoked incentives, in the form of supervisor’s preferences, on the decision about accounting policy regarding depreciation method selection and to examine subsequent post-decision distortion by evaluating the depreciation method.
Design/methodology/approach
The authors conducted two experiments with control and treatment groups, manipulating the supervisor’s indirectly evoked preferences. In Study 2, the authors also measured the evaluation of both depreciation methods to investigate post-decisional distortion regarding the assessment of the depreciation method chosen in a decision task. Study 1 was conducted among 85 accounting students, while Study 2 consisted of 200 accountants.
Findings
Both studies revealed the significant impact of supervisor’s indirectly evoked preferences on accounting policy decisions. Participants who were aware of supervisors’ preferences were more likely to choose the depreciation method that was consistent with those preferences. The authors also found that those participants attached a higher value to the depreciation method, providing evidence that adherence to the supervisor’s preferences results in a distorted assessment of the depreciation methods.
Originality/value
First, this study shows that indirectly evoked supervisors’ preferences may lead to a departure from substantive criteria resulting in low-quality accounting outcomes. Second, the assessment of the depreciation method is inseparable from the situational context, as the evaluation of the depreciation method is interdependent upon the preferences of the choice of a depreciation method and the fulfillment of those preferences.