The Micro-Economics Policy Seminar (MEPS) will take place on Tuesday (December 1) at 11:00 am. Our speaker this week will be Anh Tran (Indiana University) “The Hiding Hand of Private Ownership: Tax Evasion in 3,650 Privatized Vietnamese Enterprises”
Abstract: If private ownership provides an incentive for corporate performance, it may also encourage firms to get around laws in order to increase profit. Exploiting a mass privatization program in Vietnam, this paper employs a firm fixed-effect model to show that private ownership increases tax manipulation. Our analysis suggests that privatized firms over-report cost of materials, which reduces both income and value-added taxes. Firms over-report this cost by colluding with their suppliers, who can fake invoices by using unused retail invoices. We refer to this misbehavior as the hidden hand of private ownership, indicating an incentive to gain profit at a social expense, partly offsetting the invisible hand of the free market.
Seminars will be held on Zoom every Tuesday 11:00 am until noon. For the schedule, see cmepr.gmu.edu. Questions may be addressed to Professor John Earle (firstname.lastname@example.org).
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