CORPORATE TAX AVOIDANCE: A LITERATURE REVIEW AND RESEARCH AGENDA

Tax avoidance can range from reduction of the corporate tax burden by legitimate use of tax rules to violation of tax laws. In this paper, we endeavor to synthesize the major findings of tax avoidance research from the accounting and finance literatures over the past ten years. We consider theoretical developments and the related empirical findings about the interconnected issues of measuring tax avoidance, and the possible causes and outcomes of corporate tax avoidance. We present some ideas for further research to examine underexplored topics regarding tax avoidance.     

R&D INTENSITY AND THE EFFECTIVE TAX RATE: A META-REGRESSION ANALYSIS

We apply meta-regression techniques to provide a quantitative review of the empirical literature on how research and development (R&D) expenses affect the effective tax rate (ETR). R&D expenses relate to a well-accepted profit shifting channel, strategic placement of intellectual property within a multinational entity. Using a unique hand-collected data set, we add a new perspective to the current base erosion and profit shifting (BEPS) state of research and debate, in three ways: First, observing that primary studies report mixed evidence on how R&D expenses affect ETR, we provide a consensus estimate for this effect. Second, we consider this effect in more detail by separating a tax accounting effect and a profit shifting effect, which to our knowledge has not yet been investigated. We detect that one-third of the R&D effect on the ETR is due to the tax accounting effect and could be mitigated via book-tax conformity. We further find that 10% of the profit shifting effect can be traced back to R&D tax credits. Third, our meta-regression reveals factors that are possible sources of variation and bias in previous empirical studies.     

CORPORATE SOCIAL RESPONSIBILITY: A MICROECONOMIC REVIEW OF THE LITERATURE

This paper provides a review of the theoretical and empirical literature on Corporate Social Responsibility (CSR). Depending on whether an individual can be considered as selfish, or whether she has also social preferences, motives for CSR, can be explained in different ways. Furthermore, we explicitly highlight the influence of different Corporate Governance System on CSR as well as the relationship between firms' size and social commitment. Because it is difficult to distinguish between different theories in empirical studies, we argue that an experimental approach might be suitable to test theories of CSR.     

PRESUMPTIVE TAXATION METHODS: A REVIEW OF THE EMPIRICAL LITERATURE

This paper reviews the empirical literature studying the effect of the introduction of presumptive taxation methods on taxpayers’ behavior. Although the concept of presumptive taxation entails numerous alternative methods to determine tax liabilities, I survey two main areas of the literature: indirect tax assessment methods and presumptive minimum taxes. The review investigates efficiency and equity implications of presumptive taxation methods. Conflicting conclusions emerge about the effectiveness of presumptive policy tools in achieving different goals, such as the increase of voluntary tax compliance, the growth of tax revenues, and the reduction of shadow economy and fiscal evasion.     

WHEN OWNERSHIP STRUCTURE MATTERS: A REVIEW OF THE EFFECTS OF INVESTOR HORIZON ON CORPORATE POLICIES

This paper surveys the literature on the impact of investor horizon on corporate policies. While the desire to encourage long-term investor ownership is shared among managers, boards and policy makers, how greater long-term investor ownership benefits corporate decisions and ultimately firm performance is still under academic investigation. The contribution of this paper is twofold. The paper's first contribution is providing an up-to-date review of theoretical and empirical findings. This paper introduces the groups of long-term and short-term investors and the related classification methodologies and investor horizon proxies used to form them. It further reviews the determinants of an investor's horizon. Then, this paper organizes the literature on the impact of investor horizon on corporate policies around three main channels: the short-term pressure hypothesis, the monitoring hypothesis, and the catering hypothesis. The paper's second contribution is identifying six major challenges ahead that need to be addressed to improve the understanding of the impact of long-term (short-term) investor ownership on corporates policies. These challenges represent opportunities for further research.     

REGIONAL INTEGRATION AND POVERTY: A REVIEW OF THE TRANSMISSION CHANNELS AND THE EVIDENCE

While there is an extensive literature on the impact of regional trading agreements on trade and capital flows, as well as on the relationship between international trade, growth, and poverty there is comparatively little treatment of the possible linkages between regional integration and poverty. We analyze the channels through which regional integration could impact on poverty, and then review the existing evidence on the impact of regional integration on poverty. We focus on two key characteristics that make any regional integration process different from unilateral and multilateral liberalization: first, the asymmetric nature of the liberalization process; second, the scope or ambition of the regional liberalization being undertaken and the nature of the institutional arrangements that are put into place to manage the process of regional integration. We also distinguish between short, medium, and long run effects on poverty of regional integration processes. There is some direct evidence explicitly linking regional integration and poverty, but in good part the shedding of the light depends on an indirect literature on trade, FDI, migration, and inequality.     

MISGUIDED CORPORATE VIRTUE: THE CASE AGAINST CSR,AND THE TRUE ROLE OF BUSINESS TODAY1

The doctrine of corporate social responsibility (CSR) has now been accepted across the world – not only by businesses and business organisations, together with an array of commentators and NGOs, but also by many governments. This is a worrying development. The doctrine rests on mistaken presumptions about recent economic developments and their implications for the role and conduct of enterprises, while putting it into effect would make the world poorer and more over‐regulated.     

THE CLIOMETRICS OF INTERNATIONAL MIGRATION: A SURVEY

Abstract This is a survey of some of the key studies in the literature on international migration in history that may be described as cliometric. This literature uses the concepts and approaches of applied economics to investigate a range of historical issues and there are strong parallels with the questions that have been addressed in the literature on contemporary migrations. Here I focus on the period 1850–1940 and chiefly on migration from Europe to the New World. The survey is organized around six themes that include the forces driving migration, over time and across space; the assimilation of migrants and their effects on wages and income distribution in source and destination countries; and the evolution of immigration policy. Although this literature has drawn heavily on the tool kit of applied economists it also provides a wider perspective on many of the issues that concern migration today.     

BRIDGING TRADE THEORY AND LABOUR ECONOMETRICS: THE EFFECTS OF INTERNATIONAL MIGRATION*

Abstract This paper surveys current theoretical and empirical research on international migration with a particular emphasis on the links between trade theory and labour empirics.     

FROM THE LAB TO THE FIELD: A REVIEW OF TAX EXPERIMENTS

Tax experiments have been gaining momentum in recent years, although this literature dates back several decades. With new developments in methods and data availability, tax experiments have gradually moved away from lab settings and towards the field. This movement from the lab to the field has happened against the background of the ‘credibility revolution’ in applied economics, which has seen more rigorous methods applied to policy relevant questions, and of the availability to researchers of administrative data from tax returns. These developments have allowed significant advances in the experimental literature on tax compliance. This paper reviews this literature, giving particular attention to field experiments using administrative data, but putting them in the broader context of the compliance literature. A particular effort is made to take a global perspective, in a literature that is only recently seeing the emergence of evidence from Africa, Latin America and Asia.     

THE ECONOMICS OF CORPORATE SOCIAL RESPONSIBILITY: A FIRM‐LEVEL PERSPECTIVE SURVEY

This paper analyzes the economics of Corporate Social Responsibility (CSR), as a private response to market imperfections in order to satisfy social preferences. Depending on whether they affect regulation, competition or contracts, market imperfections driving CSR decisions are classified in three categories: public goods and bads and altruism; imperfect competition; and incomplete contracts. We successively present these drivers of CSR decisions and highlight the nature of incentives (external or internal) at work and the testable (and tested) hypotheses in the reviewed studies. We finally review the link between CSR and financial performance, as well as between CSR and social and environmental performance. A twofold discrepancy appears in the literature, opening future research paths: a disconnection between our understanding of CSR drivers and CSR impacts; and a knowledge gap between CSR financial and social consequences, the latter having received little attention.     

THE MEANING OF FAILED REPLICATIONS: A REVIEW AND PROPOSAL

The welcome rise of replication tests in economics has not been accompanied by a consensus standard for determining what constitutes a replication. A discrepant replication, in current usage of the term, can signal anything from an unremarkable disagreement over methods to scientific incompetence or misconduct. This paper proposes a standard for classifying one study as a replication of some other study. It is a standard that places the burden of proof on a study to demonstrate that it should have obtained identical results to the original, a conservative standard that is already used implicitly by many researchers. It contrasts this standard with decades of unsuccessful attempts to harmonize terminology, and argues that many prominent results described as replication tests should not be described as such. Adopting a conservative standard like this one can improve incentives for researchers, encouraging more and better replication tests.     

PRODUCTIVITY AND STRUCTURAL CHANGE: A REVIEW OF THE LITERATURE

Abstract.  This paper is a survey of the existing research on structural change at various levels of aggregation with a special focus on the relation to productivity and technological change. The exposition covers the research concerning the development of the three main sectors of the private economy, multisector growth models and recent evolutionary theories of structural change. Empirical studies of the reallocation of market or sector shares as a result of differential productivity developments are also discussed. The synthesis emphasizes the crucial interaction of supply- and demand-side forces in shaping structural change.     

OFFSHORING, MULTINATIONALS AND LABOUR MARKET: A REVIEW OF THE EMPIRICAL LITERATURE

Abstract.  This paper reviews the empirical literature on the effects of offshoring and foreign activities of multinational enterprises on developed countries' labour markets. Results suggest that material offshoring worsens wage inequality between skilled and unskilled workers; it also seems to make employment more volatile, by raising the elasticity of labour demand and the risk of job losses. Service offshoring exerts at most small negative effects on total employment, and changes the composition of the workforce in favour of high-skilled white-collar employees. Multinationals tend to substitute domestic and foreign labour in response to changes in relative wages across countries; substitutability is weak, however, and mainly driven by horizontal, market-seeking foreign direct investments.     

SUSTAINABILITY AND WELLBEING: A SCIENTOMETRIC AND BIBLIOMETRIC REVIEW OF THE LITERATURE

Interdisciplinary research on measuring the progress towards sustainability and well-being (SaW) from different perspectives and in various contexts has developed dramatically over recent decades. This growth in the literature has not only added an enormous number of dimensions to the SaW debate, but the sheer scale of the expansion has challenged researchers to be able to conduct a comprehensive analysis of the available SaW indicators. In this work, we have proposed a hybrid method comprised of sophisticated scientometric analysis to summarise scientific developments in the massive text corpus of the SaW literature in conjunction with a more traditional literature review to categorise the ‘fuzzy’ details that remain. Scientometric analysis highlights that the developed OECD countries play a vital role in the development and applications of SaW indicators and we describe key developments in this regard via a range of graphical approaches. Using an extensive collection of existing SaW indicators, the analysis is then summarised in a matrix of ranked indicators which serve as a powerful tool to compare, contrast, filter and select indicators for SaW assessment with minimum redundancies between indicators. The approach undertaken in this study is intended to be flexible and can be extended and applied to other fields of research.     

COALITION FORMATION AND BARGAINING PROTOCOLS: A REVIEW OF THE LITERATURE

This paper offers a review of the vast literature regarding bargaining and coalition formation. This topic has been generally described as the attempt to provide strategic foundations to cooperative solution concepts. It can therefore be seen as the linking ring between the non‐cooperative and the cooperative game‐theoretic approach to coalition formation. Its central role in economic theory and its relatively long history that goes back to the Nash program have fostered a large academic production, including surveys. Nonetheless, this paper will focus on an aspect that is often neglected in the dedicated surveys: the specificities of the bargaining protocols leading to different outcomes. Although generally downgraded to the rank of details, the differences in bargaining protocols, even when minor, can cause significant changes in fundamental aspects such as the possibility to reach full cooperation, the distribution of final pay‐offs and the time taken to reach an agreement. Focused on externalities‐free games, therefore on bargaining protocols sustaining solution concepts for cooperative games in characteristic function form, the paper aims at providing a brief but exhaustive review of the topic that could result in a very useful tool for any researcher approaching the subject of coalitional bargaining.     

EDUCATION AND ENTREPRENEURSHIP SELECTION AND PERFORMANCE: A REVIEW OF THE EMPIRICAL LITERATURE

Abstract This paper provides a review of empirical studies into the impact of formal schooling on entrepreneurship selection and performance in industrial countries. We describe the main effects found in the literature, we explain the variance in results across almost a hundred studies, and we put the empirical results in the context of related economic theory and the much further developed literature in labor economics (studying the rate of return to education among wage employees). Five main conclusions result from this meta‐analysis. First, the impact of education on selection into entrepreneurship is insignificant. Second, the effect of education on performance is positive and significant. Third, the return to a marginal year of schooling is 6.1% for an entrepreneur. Fourth, the effect of education on earnings is smaller for entrepreneurs than for employees in Europe, but larger in the USA. Fifth, the returns to schooling in entrepreneurship are higher in the USA than in Europe, higher for females than for males, and lower for non‐whites or immigrants. In conclusion, we offer a number of suggestions to move the research frontier in this area of inquiry. The entrepreneurship literature on education can benefit from the technical sophistication used to estimate the returns to schooling for employees.     

THE INTERSECTION OF THE FIELDS OF ENTREPRENEURSHIP AND DEVELOPMENT ECONOMICS: A REVIEW TOWARDS A NEW VIEW

Despite the popularity of promoting entrepreneurship and small and medium enterprises (SMEs) for economic development, there is little scientific basis on which policy makers can lean. The scholarly fields of entrepreneurship economics and development economics have been elaborated in isolation and only recently started to intersect. This growing intersection is, however, still fragmented, ad hoc, not based on a unifying theoretical approach and suffering from lack of proper measurement. Better policy making will hence benefit from the extension and deepening of the intersection of these fields. We contribute in this regard by providing a conceptual basis for the eventual elaboration of such a unified theoretical approach. We do so by providing an up‐to‐date review of the intersection of the two fields by noting the progress and gaps; by delineating the externalities associated with entrepreneurship in development and by proposing a synthesis definition of entrepreneurship.     

CHALLENGING THE CHALLENGERS: A REVIEW OF SERENA OLSARETTI'S LIBERTY, DESERT AND THE MARKET AND DANIEL ATTAS'S LIBERTY, PROPERTY AND MARKETS

These books attack free markets and libertarianism, alleging that their fundamental assumptions are philosophically indefensible. Olsaretti challenges the thesis that free markets produce distributively just outcomes. At most, however, she shows that limited, desert-based justifications of free-market outcomes fail to satisfy her questionable desiderata, and that particular entitlement-based justifications are inadequately supported when they confound voluntariness and freedom. Attas challenges libertarianism itself, claiming that it is fundamentally wrong, and that libertarian notions of property rights are unsustainable. But he considers only arguments based on defective notions of self-ownership and confused notions of freedom; other, more robust justifications of liberty and property are ignored. Though both of these books fail to demonstrate the strong conclusions they assert, they highlight the dangers of substituting polemic for philosophy. Free markets, property and liberty need, and deserve, rigorous philosophical defences.