Impact of Third Party Audits on Compliance and Corruption: Evidence Using a Policy Experiment

Tantri, P L (2017) Impact of Third Party Audits on Compliance and Corruption: Evidence Using a Policy Experiment. Working Paper. Indian School of Business. (Unpublished)

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Abstract

Using a policy experiment in India, we examine the impact of a third party audit on tax compliance. Employing the generalized difference-in-difference methodology, we find that growth in tax payment is 58 percentage points higher under a regime with no third-party audit. The fact that the differential growth in tax is negatively associated with differential growth in discretionary expenses and also the absence of any real growth of treated firms, suggestively indicate collusion and corruption. Our results hold up-to a battery of placebo tests, absorption of time-varying and time-invariant unobservable factors and, display heterogeneity based on expected lines.

Affiliation: Indian School of Business
ISB Creators:
ISB CreatorsORCiD
Tantri, P LUNSPECIFIED
Item Type: Monograph (Working Paper)
Uncontrolled Keywords: Tax compliance, Corruption, Third party audit
Subjects: Finance
Depositing User: Ilayaraja M
Date Deposited: 01 Jul 2019 19:57
Last Modified: 01 Jul 2019 19:57
URI: http://eprints.exchange.isb.edu/id/eprint/1213
Publisher URL: http://dx.doi.org/10.2139/ssrn.2904811
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