An Explanation of the Levels of Compliance in Filing Company Annual Returns Based on the Theory of Planned Behavior: A Case for Zambia

Abstract

Company \nregisters are increasingly becoming a crucial source of business information \nfor many stakeholders. While most company registers have concentrated on \nsimplifying business registrations, reducing the number of procedures, time and \ncost for small entities to be formed, compliance remains a big challenge for \nmany company registers. Compliance is not just influenced by economic variables \nof enforcement and penalties but influenced by demographic, socio-economic and \ninstitutional factors. The aim of this study was to identify and explain the \nfactors influencing compliance behaviour in filing company annual returns based \non the Theory of Planned Behaviour. The study used a mixed research approach. A \nsample of 165 registered companies was randomly selected from the population of \n68,049 active companies on the PACRA register. 9 PACRA officers were selected \nusing judgment sampling and in-depth interviews were used. Primary data were \ncollected through structured questionnaires. The secondary data were also \ncollected by reviewing related published materials. Statistical tests of \nindependence (chi-square tests) formed the basis of analysis. The results \nshowed that annual return filings are influenced both by demographic and \nexternal factors. The demographic factors like employment status, age and \neducation were found to positively influence compliance. Further, compliance \nwas highest (68%) among those with tertiary education compared with (47%) those \nwith no form of schooling. The study also revealed that those in formal \nemployment were more compliant (64%) than those without employment (47%). \nGender was found to be an insignificant factor and it has no influence on \ncompliance. On external factors, cultural norms, government policies and \ncompliance fees were identified in the study and were found to have an \ninfluence on compliance (save for compliance fees). Finally, the findings of \nthe study may guide government institutions to save on enforcement costs (i.e. before they implement costly \nsensitization campaigns and educational clinics, they need to understand \nvariables that affect compliance behaviour). The study findings can help policy \nmakers and PACRA meet their strategic goals of raising compliance levels.