Konferenzbeitrag
Financial Contracting with Tax Evaders
This paper derives the optimal financial contract when a borrowing entrepreneur can evade taxes in a model of costly state verification. In contrast to previous literature on costly state verification and financial contracting, we find that standard debt contracts are not optimal when tax evasion is possible. Instead, the optimal contract is debt-like only for very low and very high profit realizations, and features a constant repayment and verification of returns in an intermediate range. This occurs because the entrepreneur has to be given a positive rent even under verification in order to not abuse her limited liability protection for excessive tax evasion activities.
- Language
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Englisch
- Bibliographic citation
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Series: Beiträge zur Jahrestagung des Vereins für Socialpolitik 2014: Evidenzbasierte Wirtschaftspolitik - Session: Financial Markets and Information ; No. G09-V2
- Classification
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Wirtschaft
Corporate Finance and Governance: General
Tax Evasion and Avoidance
Asymmetric and Private Information; Mechanism Design
- Event
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Geistige Schöpfung
- (who)
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Meyer-Brauns, Philipp
- Event
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Veröffentlichung
- (who)
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ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften, Leibniz-Informationszentrum Wirtschaft
- (where)
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Kiel und Hamburg
- (when)
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2014
- Handle
- Last update
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10.03.2025, 11:43 AM CET
Data provider
This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Konferenzbeitrag
Associated
- Meyer-Brauns, Philipp
- ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften, Leibniz-Informationszentrum Wirtschaft
Time of origin
- 2014
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Tax Influence on Financial Structures of M&As
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Unit Tax versus Ad Valorem Tax: A Tax Competition Model with Cross-border Shopping
Deferred Tax Positions under the prism of financial crisis and the effects of a corporate tax reform
Incomplete Contracting, Renegotiation, and Expectation-Based Loss Aversion
Contracting frictions and inefficient layoffs of older workers
Corporate Tax Reforms With Policy Uncertainty
Can Network Effects Impede Optimal Contracting in Debt Securities?
Contracting with Researchers
Vertical Contracting with Endogenous Market Structure
FAT or VAT? The Financial Activities Tax as a Substitute to Imposing Value Added Tax on Financial Services
A Theory of Delegated Contracting
Tax Influence on Financial Structures of M&As
Relational Contracting, Repeated Negotiations, and Hold-Up
Unit Tax versus Ad Valorem Tax: A Tax Competition Model with Cross-border Shopping
Deferred Tax Positions under the prism of financial crisis and the effects of a corporate tax reform
Incomplete Contracting, Renegotiation, and Expectation-Based Loss Aversion
Contracting frictions and inefficient layoffs of older workers
Corporate Tax Reforms With Policy Uncertainty