The role of audit information dissemination in curbing the contagion of tax noncompliance

Fauzan Misra, Rahmat Kurniawan


Abstract


Disclosure about tax evasion may trigger the contagion of such behavior. However, exposure to news about discovered misconduct can lead to deterrence as well. The economics-of-crime approach and social norm-based explanation suggest that exposure to news about evasion may influence the receiver of information to imitate such misconduct. In contrast, a Psychology-based explanation argues against contagion in taxpayers' misbehavior. This study aims to investigate the effect of disclosing evasion information by another taxpayer toward tax non-compliance and testing of the effectiveness of audit information dissemination to mitigate the contagion effect of such non-compliance that may be occurred. The research was conducted by an experimental approach with a 2 x 2 between-subjects design. The results show that when information about tax evasion is publicly disclosed, unaudited taxpayers tend to imitate such misbehavior. However, the contagion effect of non-compliance can be mitigated by the official announcement of tax audit information.


Keywords


Tax non-compliance, evasion information, contagion, tax audit information



DOI: https://doi.org/10.22219/jibe.v4i01.10223

Journal of Innovation in Business and Economics (JIBE)

Faculty of Economics and Business, Universitas Muhammadiyah Malang

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