No. 34: Corporate tax avoidance and the real effects of taxation: A review

Abstract

The tax literature of the past two decades has been dominated by empirical studies on corporate tax avoidance and a growing literature on the real effects of taxation. However, this literature lacks a quantitative synthesis of these studies and an in-depth discussion of potential convergences and divergences in empirical findings. To thoroughly evaluate empirical results, we provide a comprehensive theoretical framework that allows us not only to organize the literature, but also to identify underexplored yet fruitful areas for future research. We link our theoretical predictions to a quantitative synthesis of all empirical tax studies published in the top accounting, finance, and economics journals over the last two decades. Combining theoretical predictions with a quantitative synthesis allows us to identify potential empirical inconsistencies and areas for future tax research.