How tax practitioners approach ethical dilemmas remains generally unexplored in academic literature. We use here Rest's original Defining Issues Test (Development in judging moral issues. ...Minneapolis: University of Minnesota Press, 1979; Moral development. Advances in research and theory. New York: Praeger Publishers, 1986), combined with a tax context-specific test and in conjunction with a control group of non-tax specialists, to examine tax practitioners' moral reasoning in a social and tax context. We investigate: (i) the effect of a tax context on issues raised (finding that practitioners generally reason at lower levels than in social scenarios); (ii) whether the profession attracts people who reason at certain levels (finding that it does not); and (iii) whether practitioners are affected by training/socialization in their professional context (finding that that they are).
This study develops a “comply or explain” index which captures compliance and quality of explanations given for non‐compliance with the corporate governance codes in UK and Germany. In particular, we ...explain, how compliance and quality of explanations provided in non‐compliance disclosures, and various other internal corporate governance mechanisms, affect the market valuation of firms in the two countries. A dynamic generalised method of moments (GMM) estimator is employed as the research technique for our analysis, which enabled us to control for the potential effects of endogeneity in our models. The findings of our content analysis suggest that firms exhibit significant differences in compliance, board independence and ownership structure in both countries. The “comply or explain” index is positively associated with the market valuation of UK firms suggesting that compliance and quality governance disclosure are value relevant in the UK. Institutional blockholders' ownership is, however, negatively associated with the market value of firms, which raises questions about the monitoring role of institutional shareholders in both countries. We argue that both compliance and explanations given for non‐compliance are equally important, as long as valid reasons and justifications for non‐compliance are provided by the reporting companies. These findings thus imply that the “comply or explain” principle is working well and that UK and German companies could benefit from the flexibility offered by this principle. With respect to the role of board size, board independence, ownership structure, and institutional ownership of firms, this study offers policy implications.
•We tested the slippery slope framework of tax compliance in 44 countries.•Both trust and power increase intended tax compliance and mitigate tax evasion.•Trust increases voluntary compliance and ...power increases enforced compliance.•Power enhances voluntary compliance only if citizens trust the authorities.•Effects were relatively stable across the 44 countries.
The slippery slope framework of tax compliance emphasizes the importance of trust in authorities as a substantial determinant of tax compliance alongside traditional enforcement tools like audits and fines. Using data from an experimental scenario study in 44 nations from five continents (N = 14,509), we find that trust in authorities and power of authorities, as defined in the slippery slope framework, increase tax compliance intentions and mitigate intended tax evasion across societies that differ in economic, sociodemographic, political, and cultural backgrounds. We also show that trust and power foster compliance through different channels: trusted authorities (those perceived as benevolent and enhancing the common good) register the highest voluntary compliance, while powerful authorities (those perceived as effectively controlling evasion) register the highest enforced compliance. In contrast to some previous studies, the results suggest that trust and power are not fully complementary, as indicated by a negative interaction effect. Despite some between-country variations, trust and power are identified as important determinants of tax compliance across all nations. These findings have clear implications for authorities across the globe that need to choose best practices for tax collection.
Ethical dilemmas involving tax issues were identified by members of the American Institute of Certified Public Accountants as posing the most difficult ethical problem for them (Finn et al., Journal ...of Business Ethics 7(8), pp. 607-609, 1988). The KPMG tax shelter fraud case proves that the tax profession has not gone untainted in the age of numerous accounting and corporate scandals, such as the Enron debacle (Sikka and Hampton, Accounting Forum 29(3), 325-343, 2005). High-profile scandals serve to highlight the problems caused by differences in ethical judgement among accountants and tax practitioners and the issue of ethics has been brought publicly to the forefront of the profession. Nevertheless, the nature and dimension of ethical issues in tax practice have been largely unexplored (Erard, Journal of Public Economics 52(2), 163-197, 1993; Marshall et al., Journal of Business Ethics 17(12), 1265-1279, 1998; Frecknall Hughes, Unpublished PhD Thesis, The University of Leeds, 2002). This research aims to contribute to the debate on ethics in tax practice by reporting interview data on tax practitioners' perceptions of ethics in the jurisdictions of Ireland and the United Kingdom and exploring the link or equation of ethics with risk management.
•Blockchain technology is a remarkable technological innovation of the 21st century.•Our survey paper explores the opportunities and issues presented by blockchain.•We discuss the implications of ...blockchain for accounting, finance, taxation, banking and international trade.•We show how organisations and regulators can leverage blockchain to upscale business operations.
Blockchain is one the most remarkable technological innovations of the 21st century. The most notable application of blockchain is in the development and operation of cryptocurrencies (e.g. bitcoin, ethereum, among others). Besides the financial services industry, blockchain is also considered in other sectors such as international trade, taxation, supply chain management, business operations and governance. However, blockchain has not been examined comprehensively in all areas of relevant literature. This article conducts a survey of the literature to gain an understanding of the opportunities and issues presented by blockchain in various business functions. The article begins by providing a discussion regarding how the blockchain technology operates. The paper takes a broad focus in its analysis of the prospects of blockchain for various business functions, including banking and the capital markets, corporate governance, international trade, and taxation. The paper demonstrates how organisations and regulators can leverage blockchain to upscale business operations, enhance efficiency and reduce operational costs. The key drawbacks of blockchain that stakeholders need to bear in mind before adopting the technology are also highlighted. The article also reflects on how organisations can tap into blockchain to reap the full potential of the fourth industrial revolution.
Ethical reasoning in tax practice: Law or is there more? Doyle, Elaine; Frecknall-Hughes, Jane; Summers, Barbara
Journal of international accounting, auditing & taxation,
September 2022, 2022-09-00, Volume:
48
Journal Article
Peer reviewed
Open access
Private sector tax practitioners are often accused of unethical behavior in developing contrived tax avoidance arrangements. Such arrangements usually comply with the letter of the law but contravene ...its underlying (often unstated) ‘spirit’. Prior research comparing the ethical reasoning of private sector tax practitioners, government revenue tax practitioners and a non-tax (control) group in both social and tax contexts found no significant differences between them in a social context. However, where tax dilemmas were concerned, private sector tax practitioners demonstrated lower levels of ethical reasoning. We seek here to examine whether this difference results from the regard private sector tax practitioners have for the law – in other words, whether they have a law and order orientation when facing ethical issues or whether the professional context offers other motives. Using the Defining Issues Test (DIT) and a tax-specific context version of the DIT, we test whether there is a law and order dominance in the ethical reasoning of private sector tax practitioners in both tax and social contexts, in comparison with government revenue tax practitioners and a non-tax control group.
As a contribution to the continuing debate about tax practitioner ethics, this paper explores the main streams of Western ethical thought that are relevant to tax practitioners' work, most typically ...deontology and consequentialism (although virtue ethics and distributive justice are also considered). It then goes on to consider the impact of such ethical influences on the professional ethical codes of conduct that govern tax practitioners' work (with specific reference to the UK and Ireland), and attempts to unravel the complex work and ethical environment of the practice of tax in terms of tax compliance and tax avoidance. The paper then examines the prior studies on tax practitioners and ethics and the type of dilemmas that practitioners face in the context of their work. The paper proceeds to examine empirically the extent to which tax practitioners take a consequentialist versus a deontological approach in their reasoning about moral dilemmas. This is carried out by an innovative use of the Defining Issues Test.
While much of the empirical accounting literature suggests that, if differences do exist, Big Four employees are more ethical than non-Big Four employees, this trend has not been evident in the ...recent media coverage of Big Four tax practitioners acting for multinationals accused of aggressive tax avoidance behaviour. However, there has been little exploration in the literature to date specifically of the relationship between firm size and ethics in tax practice. We aim here to address this gap, initially exploring tax practitioners' perceptions of the impact of firm size on ethics in tax practice using interview data in order to identify the salient issues involved. We then proceed to assess quantitatively whether employer firm size has an impact on the ethical reasoning of tax practitioners, using a tax context-specific adaptation of a well-known and validated psychometric instrument, the Defining Issues Test.
Marketing in small and medium sized enterprises Simpson, Mike; Padmore, Jo; Taylor, Nick ...
International journal of entrepreneurial behaviour & research,
11/2006, Volume:
12, Issue:
6
Journal Article
Peer reviewed
Purpose - The purpose of this paper is to report on a full-scale testing of the role of marketing and its relevance in small and medium sized enterprises (SMEs). The objective is to present the ...results of a rigorous assessment of a new model of marketing in SMEs.Design methodology approach - A positivist approach relied on the use of the hypothetico-deductive method to produce the theoretical model. Both quantitative and qualitative research methods were applied to investigate the model. This paper reports on a large-scale questionnaire survey, follow-up interviews with SMEs owner-managers and the use of published accounts to show how companies have performed during this study.Findings - The role and relevance model of marketing in SMEs has been thoroughly investigated and tested. The model offers a straightforward way of diagnosing the situation within an SME. The simplicity of the model allows for a clearer understanding of what is often a complex and messy situation within these companies and their business environment. Some findings suggest a positive link between a company's financial performance and its approach to marketing within the model.Practical implications - The paper concludes that the model goes a long way to explaining the behaviour of SMEs with regard to marketing. The model appears to be viable and could be used to analyse and diagnose the situation regarding marketing within SMEs.Originality value - The paper offers a unique theoretical and practical insight into the issue of marketing in SMEs.
Tax practitioners play a crucial role in the degree of taxpayers’ compliance – a role that has increased as tax systems worldwide have become more complex. However, little is known about tax ...authorities’ impact on taxpayers’ decisions to employ tax practitioners. Based on earlier research on motivations to employ a tax practitioner and the extended slippery slope framework of tax compliance, we conducted two studies which provide some answers. A survey study – comprising a representative sample of 500 Austrian self-employed taxpayers – revealed that financial gain is not the most important reason to employ a tax practitioner but instead the motivation to avoid problems with the tax authorities. Related to that, we also find that taxpayers’ perception of tax authorities wielding coercive power motivates them to employ tax practitioners. In the interview study with 33 self-employed taxpayers and 30 tax auditors, taxpayers indicated that they sought to avoid contact with tax officers by employing tax practitioners. This finding was supported by tax officers who reported preferring interaction with tax practitioners over direct contact with taxpayers. The two studies point to the complex relationship between taxpayers, tax authorities and tax practitioners, and allow the drawing of theoretical and practical implications.
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