We examine how anti-avoidance rules and a strategic tax auditor affect a firm’s investment and tax-avoidance incentives in a game-theoretic model. Our model investigates a firm that decides on a lump-sum investment and tax avoidance. In contrast to previous studies, our analysis incorporates a...

We examine whether higher book-tax conformity and its effects on firms’ investment and tax reporting decisions decrease misleading tax reporting and increase tax revenue. In contrast to previous studies, we incorporate an investment decision into a strategic tax-compliance model. In the model,...

The Internet Appendix includes formal claims and proofs for the alternative sequence section. The original paper `When do firms use one set of books in an international tax compliance game?' is available at the following URL: https://ssrn.com/abstract=3012231

Large multinational companies are regularly suspected of using transfer pricing of intangibles to shift profits from high- to low-tax jurisdictions. We study the optimal transfer prices while endogenizing the location choice of intangibles and considering spillovers. In line with the initial...

This study examines how a strategic tax auditor affects a multinational firm’s transfer pricing in a tax compliance game. Our model uses a divisionalized firm, in both a low-tax and a high-tax country, that decides to implement a transfer-pricing regime with either one or two sets of books....