Institutions and Corporate Tax Evasion : A Review of Literature and a Methodological Exploration

We first review the recent research published in the Journal of International Accounting Research (JIAR) on the influence of international institutions on accounting practices and follow it with a discussion of the literature studying the influence of institutions on tax avoidance and tax evasion. We then explore a new methodological approach that draws on the theory of institutional hierarchy proposed by Williamson (2000) and examine the relative importance of three broad types of institutions (informal, formal and media) in curtailing perceived tax evasion activities. We contribute to the international accounting literature by summarizing the recent research that addresses tax avoidance and tax evasion and providing preliminary evidence on how employing an institutional hierarchy approach can address the interdependencies between commonly used institutional factors