Social Networks and Tax Avoidance: Evidence from a Well-Defined Norwegian Tax Shelter

AbstractIn 2005, over 8% of Norwegian shareholders transferred their shares to new (legal) tax shelters intended to defer taxation of capital gains and dividends that would otherwise be taxable in the aftermath of a reform implemented in 2006. Using detailed administrative data, we identify family networks and describe how take-up of tax avoidance progresses within a network. A feature of the reform was that the eligibility to set up a tax shelter changed discontinuously with individual shareholding of a firm and we use this fact to estimate the causal effect of availability of tax avoidance for a taxpayer on tax avoidance by others in the network. We find that eligibility in a social network increases the likelihood that others will take-up. This suggests that taxpayers affect each other’s decisions about tax avoidance, highlighting the importance of accounting for social interactions in understanding enforcement and tax avoidance behavior, and providing a concrete example of optimization frictions in the context of behavioral responses to taxation.

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Investment Opportunity Sets, Operating Uncertainty, and Capital Market Pressure: Determinants of Investments in Tax Shelter Activities?

Journal of the American Taxation Association ◽

10.2308/atax-50599 ◽

2013 ◽

Vol 36 (1) ◽

pp. 1-26 ◽

Cited By ~ 27

Author(s):

Sean T. McGuire ◽

Thomas C. Omer ◽

Jaron H. Wilde

Keyword(s):

Capital Market ◽

Tax Avoidance ◽

Investment Strategy ◽

Data Availability ◽

Investment Behavior ◽

Investment Opportunity ◽

Opportunity Sets ◽

Tax Shelter ◽

Tax Shelters ◽

Market Pressure

ABSTRACT Prior research documents substantial variation in firms' tax avoidance activities and questions why some firms choose not to take advantage of the apparent benefits of tax planning (i.e., the “undersheltering puzzle”). We provide additional insight into the undersheltering puzzle by investigating the decision to invest in a tax shelter from the perspective of a firm's overall investment strategy. We examine whether three factors associated with traditional investment behavior (firms' investment opportunity sets, operating uncertainty, and capital market pressure) are also associated with investments in tax shelter activities. Our results suggest that firms with large investment opportunity sets and higher operating uncertainty are less likely to invest in tax shelters. We also find that firms with greater capital market pressure are more likely to invest in tax sheltering activities. Overall, we find that factors that influence firms' investment behavior help to explain why more firms do not invest in tax shelters. Data Availability: All data used in this study are available from publicly available sources identified in the manuscript. JEL Classifications: H25, H26, M41

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Social Networks Approach for Persons With Aphasia

Perspectives on Communication Disorders and Sciences in Culturally and Linguistically Diverse Populations ◽

10.1044/cds12.3.6 ◽

2005 ◽

Vol 12 (3) ◽

pp. 6-14 ◽

Cited By ~ 1

Author(s):

Candace Vickers ◽

Darla Hagge

Keyword(s):

Social Networks

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Algebraic Models for Social Networks

10.1017/cbo9780511571220 ◽

1993 ◽

Cited By ~ 50

Author(s):

Philippa Pattison

Keyword(s):

Social Networks ◽

Algebraic Models

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Multilayer Social Networks

10.1017/cbo9781139941907 ◽

2016 ◽

Cited By ~ 53

Author(s):

Mark E. Dickison ◽

Matteo Magnani ◽

Luca Rossi

Keyword(s):

Social Networks ◽

Multilayer Social Networks

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Hostility and Perceptions of Support in Ambiguous Social Interactions

Journal of Individual Differences ◽

10.1027/1614-0001.27.2.108 ◽

2006 ◽

Vol 27 (2) ◽

pp. 108-115 ◽

Cited By ~ 5

Author(s):

Ana-Maria Vranceanu ◽

Linda C. Gallo ◽

Laura M. Bogart

Keyword(s):

Social Support ◽

Social Networks ◽

Information Processing ◽

Social Interactions ◽

Social Information Processing ◽

Perceived Social Support ◽

Social Information ◽

Inverse Association ◽

Processing Bias ◽

Information Processing Bias

The present study investigated whether a social information processing bias contributes to the inverse association between trait hostility and perceived social support. A sample of 104 undergraduates (50 men) completed a measure of hostility and rated videotaped interactions in which a speaker disclosed a problem while a listener reacted ambiguously. Results showed that hostile persons rated listeners as less friendly and socially supportive across six conversations, although the nature of the hostility effect varied by sex, target rated, and manner in which support was assessed. Hostility and target interactively impacted ratings of support and affiliation only for men. At least in part, a social information processing bias could contribute to hostile persons' perceptions of their social networks.

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