ABSTRACT

This paper investigates whether future time reference in languages affects corporate tax avoidance. Consisting of 265,652 firm-year observations, we cover 42 countries during the 1989 to 2020 periods. The results show that those firms have relatively low cash effective tax rates when their country’s language does not distinguish grammatically between future and present events. Thus, adopting IFRS accounting and the local legal environment could moderate this condition. Our findings remain after considering endogeneity problems and implementing a series of robustness tests. Moreover, we provide additional evidence regarding the effects of formal institutions on tax avoidance and a new approach for regulators to encourage tax compliance and evaluate their local legal environments to more effectively reducing financial risk.

摘要

本文调查语言中的未来时间参考是否会影响公司避税。我们由 265,652 个公司年度观测值组成，涵盖 1989 年至 2020 年期间的 42 个国家。结果表明，当他们所在国家/地区的语言在语法上无法区分未来事件和现在事件时，这些公司的现金有效税率相对较低。因此，采用 IFRS 会计和当地法律环境可以缓和这种情况。在考虑了内生性问题并实施了一系列稳健性检验之后，我们的发现仍然存在。此外，我们提供了关于正规机构对避税影响的额外证据，以及监管机构鼓励税收合规和评估当地法律环境以更有效地降低金融风险的新方法。