Challenges in Identifying Effects and Determinants of Corporate Tax Avoidance

Policymakers worldwide try to hinder tax avoidance. In order to implement effective tax regulations, it is essential to completely understand why corporations avoid taxes and why some appear to be more effective than others. However, various challenges in identifying effects and determinants of corporate tax avoidance cause knowledge gaps. This thesis consists of three essays highlighting the necessity of refined identification strategies. The first essay “The Undersheltering Puzzle and its Persistence over Time” analyzes corporate tax avoidance over time and suggests a significant impact of firm fixed effects. The second essay “Tax Avoidance through Advance Tax Rulings – Evidence from the LuxLeaks Firms”, co-authored with Michael Overesch, investigates the influence of advance tax rulings disclosed through Luxembourg Leaks on corporate tax avoidance. The final essay “Effects of Disclosing Tax Avoidance: Capital Market Reaction to LuxLeaks”, co-authored with Michael Overesch and Alexander Tassius, examines the capital market reaction to this unintended disclosure of tax avoidance.