Transparency, Tax Pressure and Access to Finance

Marco Pagano, Tullio Jappelli (), Fausto Panunzi and Andrew Ellul

No 8939, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: In choosing transparency, firms must trade off the benefits from better access to finance against the cost of a greater tax burden. We study this trade-off in a model with distortionary taxes and endogenous rationing of external finance. The evidence from two different data sets, one formed only by listed firms and another mainly by unlisted firms, bears out the model?s predictions: First, investment and access to finance are positively correlated with accounting transparency, especially in firms that depend more on external finance, and are negatively correlated with tax pressure. Second, transparency is negatively correlated with tax pressure, particularly in sectors where firms are less dependent on external finance, and is positively correlated with tax enforcement. Finally, financial development enhances the positive effect of transparency on investment, and encourages transparency by financially dependent firms.

Keywords: Access to finance; Tax pressure; transparency (search for similar items in EconPapers)
JEL-codes: G31 G32 G38 H25 H26 (search for similar items in EconPapers)
Date: 2012-04
New Economics Papers: this item is included in nep-acc and nep-iue
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
https://cepr.org/publications/DP8939 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Journal Article: Transparency, Tax Pressure, and Access to Finance (2016)
Working Paper: Transparency, Tax Pressure and Access to Finance (2015)
Working Paper: Transparency, tax pressure and access to finance (2012)
Working Paper: Transparency, Tax Pressure and Access to Finance (2012)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:8939

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP8939

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().