Author:
Nimer Khalil,Bani-Mustafa Ahmed,AlQudah Anas,Alameen Mamoon,Hassanein Ahmed
Abstract
Purpose
This paper aims to explore how the role of the perception of good public governance reduces tax evasion (TE). Besides, this study investigates whether the nexus of public governance and TE differs between developed and developing economies.
Design/methodology/approach
Apart from the ordinary least squares (OLS) model, this study uses the linear mixed modeling technique. The World Governance Indicators and the multiple causes estimation (MIMIC) method are used to measure public governance. The shadow economy is used as a proxy for TE.
Findings
The results show that people's perceptions of public governance and the quality of government institutions are core elements that influence tax-evasion behavior. Besides, the rule of law (RoL) and political stability (PS) significantly impact tax-evasion behavior in developing countries. Nevertheless, the RoL, the control of corruption and PS are the most critical tax-evasion determinants among public governance indicators for developed countries. Regulatory quality shows a substantial positive relationship with TE in developed but not developing countries.
Practical implications
This paper provides a guide for policymakers on reducing tax-evasion behavior by paying more attention to maintaining the RoL and PS and fighting corruption. Additionally, this study highlights the importance of people's perceptions of the government's pursuit of the above policy-related improvements, which, in turn, affect their tax behavior.
Originality/value
To the best of the authors’ knowledge, this study is the first to explore the role of people's perceptions of improvements in public governance and how this can reduce TE behavior in developed and developing economies. Unlike prior studies, this study used the linear mixed model method, which is more advantageous than OLS and produces robust estimators.
Subject
Economics, Econometrics and Finance (miscellaneous),Accounting,Management Information Systems
Reference67 articles.
1. The effect of corruption and governance on tax revenues;The Pakistan Development Review,2010
2. Does corruption adversely affect economic growth in Tunisia? ARDL approach;Journal of Money Laundering Control,2020
3. Impact of gender diversity on social and environmental performance: evidence from Malaysia;Corporate Governance: The International Journal of Business in Society,2017
4. Public financial management reform: an ongoing journey towards good governance;Journal of Financial Reporting and Accounting,2018
5. Corporate governance in Ireland: new challenges and opportunities;Journal of Financial Reporting and Accounting,2018
Cited by
3 articles.
订阅此论文施引文献
订阅此论文施引文献,注册后可以免费订阅5篇论文的施引文献,订阅后可以查看论文全部施引文献