Amy M. Hageman

The Influence of State Sales and Use Taxes on Manufacturers’ Capital Expenditures and Employment:

This study investigates the relationship between the state sales and use tax (SUT) burden and manufacturing firms’ employment and capital expenditures for the period 1983–2006. Using an instrumental variable model, our results indicate that the SUT burden (i.e., the product between the sales and use tax rate and sales and use tax exemptions) on purchases of materials and machinery is related to changes in capital expenditures and employment, even after controlling for corporate income tax variables and other economic factors. The economic impact of this relationship is relatively small; however, the results have important policy implications in the present lean state budget environment, as state legislators must balance revenue needs with the desire to provide economic development incentives.

An institutional perspective on corruption in transition economies

Manuscript Type Empirical Research Question/Issue Companies operating in transition economies encounter a broad range of potential challenges. In the area of tax, firms make direct tax payments but may also encounter unofficial tax costs in the form of bribery or extortion. We focus on institutional determinants, including formal rules, informal rules, and enforcement, to examine conditions under which firms are more likely to encounter these transactions. We operationalize formal rules as rule-based trust and informal rules as dispositional trust. Research Findings/Insights Based on a sample of over 5,000 firms representing 20 transition economies, we show that when rule-based trust is high, the presence of tax enforcement activities in the form of visits and inspections by tax officials does not change the relationship between rule-based trust and unofficial payments. However, when dispositional trust is low, unofficial payments are more likely if verification activities occur. Theoretical/Academic Implications We adopt a more holistic view and focus on the joint consideration of different institutional determinants and firm outcomes. In doing so, the article demonstrates the complexity of firms’ tax environments where enforcement mechanisms can have unwelcome consequences, and, under certain conditions, create conditions for the persistence of corruption. Practitioner/Policy Implications This paper highlights the importance of the institutional landscape, especially considering the history of institutional voids in many transition economies. The results have implications for corporate governance and caution regulators and practitioners to consider institutional complexities when implementing reforms or establishing businesses in transition economies.

The Influence of Client Attributes and Organizational Climate on Tax Professionals

Tax professionals in accounting firms must meet professional standards in working with their clients, but may also face pressure from both their clients and firms when making ethical decisions. The purpose of this study is to examine the influence of client attributes and organizational climate on tax professionals’ ethical decision making within accounting firms. Based on an experimental design with 149 practicing tax professionals, results indicate that tax professionals are not swayed by client importance or social interaction with the client when making ethical decisions. However, tax professionals are more likely to engage in ethical behavior when their own accounting firm monitors and tracks the quality of client service and has an organizational climate that emphasizes policies and rules; unethical behavior is more common when accounting firms emphasize using personal ethics in decision making. The results of the study suggest the importance of strong policies and procedures to promote ethical decision making in firms.

Eye-Tracking Experiments in Social and Environmental Accounting Research

ABSTRACT In this article, we demonstrate the relevance of eye-tracking experiments in social and environmental accounting (SEA) research. Up to now, this type of design has been used in some areas within accounting research, but SEA has been neglected. If one is to adopt a user perspective [Merkl-Davies, D. M., and N. M. Brennan. 2007. “Discretionary Disclosure Strategies in Corporate Narratives: Incremental Information or Impression Management?” Journal of Accounting Literature 27: 116–196; 2011. “A Conceptual Framework of Impression Management: New Insights from Psychology, Sociology and Critical Perspectives.” Accounting and Business Research 41 (5): 415–437], the investigation and the understanding of the way social and environmental information affects user perceptions and decisions requires, among other tools, the use of eye-tracking setups. We discuss the need for eye-tracking experiments in SEA research and provide some preliminary evidence on their usefulness by conducting an illustrative experiment.

Student and Professional Attitudes about the use of the Internal Revenue Code and Treasury Regulations in an Introductory Tax Class

Abstract We investigate the perceptions and attitudes of both students and tax professionals about the use of the Code and Regulations in an introductory tax course. We administer a survey at the beginning and end of the semester to 106 students enrolled in an introductory tax course, and a separate survey that is completed by 120 tax professionals. Students enrolled in an introductory tax course that integrates the use of the Code and Regulations feel significantly more proficient in using and interpreting this material at the end than at the beginning of the semester. Supplemental assessment of learning data also indicates that students who have been exposed to the Code and Regulations in this course have a fairly high degree of proficiency in accessing and interpreting material. Furthermore, tax professionals view the ability to read and interpret the Code and Regulations as particularly valuable when entering the workplace and somewhat valuable for the certified public accountants exam. This study’s findings extend prior literature on the introductory tax course and provide evidence that students display positive attitudes on the use of the Code and Regulations after being exposed to this skill, and that tax professionals consider the ability to access and interpret the authoritative support in the Code and Regulations quite useful for the workplace.