Essays on tax avoidance

Abstract

This thesis investigates the determinants of corporate tax avoidance by examining the influence of informal institutional pressures and contextual factors across three interrelated empirical studies. Moving beyond conventional firm-level and governance explanations, it explores how socio-cultural, regulatory, and competitive environments shape tax behaviour among U.S. firms. The first study tests whether localised creative corporate culture—measured by the regional concentration of creative classified occupations—affects long-term tax avoidance. Using a panel of U.S. firms (1990–2022) and county-level data from the ERS creative class index, it applies OLS, 2SLS, and PSM estimations with robustness checks. Grounded in Institutional Theory, the findings reveal that firms in highly creative regions pursue more aggressive tax strategies, particularly under greater tax uncertainty. The second study examines how regulatory fragmentation, captured through a machine-learning-based textual measure of U.S. federal regulations, influences tax avoidance. Based on U.S.-listed firms (1995–2019), and using OLS, 2SLS, and PSM estimations, the results show that fragmentation generally limits aggressive tax planning, with stronger effects under high regulatory intensity—highlighting how institutional complexity and enforcement shape compliance. The third study explores technological peer pressure—proxied by peers’ relative R&D intensity—and its effect on tax avoidance using firm-year data from U.S. public companies (1996–2019). The results indicate that firms under greater technological pressure engage in higher tax avoidance in order to reallocate resources toward innovation, a tendency amplified under financial constraint. Collectively, the thesis advances our understanding of corporate tax behaviour by incorporating Institutional Theory, innovation dynamics, and tax policy perspectives. It extends insights for policymakers and scholars on how broader institutional and competitive contexts influence firms’ fiscal decisions beyond those from internal financial or governance factors.

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Identifiers

ORCID for Norah Abdullah Alduhan: orcid.org/0009-0006-5106-6159

ORCID for Ishmael Tingbani: orcid.org/0000-0002-4012-1224

ORCID for Mohamed Elmahgoub: orcid.org/0000-0001-8683-2542

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