Tax, lies, and red tape

Weak institutional environments in poor countries may lead to lower tax compliance by firms. This may be especially true for family firms, whose owners have higher stakes in the firm and longer horizons, increasing their incentives for evasion, as well as access to local networks and information, increasing their opportunities for evasion. This project uses firm-level data from manufacturing firms in India to examine whether continued involvement of the founding family leads to lower tax compliance.

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