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Public policy, political connections, and effective tax rates: Longitudinal evidence from Malaysia


Adhikari, Ajay and Derashid, Chek and Zhang, Hao (2006) Public policy, political connections, and effective tax rates: Longitudinal evidence from Malaysia. Journal of Accounting and Public Policy, 25 (5). pp. 574-595. ISSN 0278-4254

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Abstract

This study examines the link between effective tax rates (ETR) and political connections in developing economies. The political connections explanation is informed by the observation that developing economies tend to be “relationship-based” rather than “market-based” capitalisms. Two proxies of political patronage are developed and applied to a group of Malaysian firms over a 10-year period. We find firms with political connections pay tax at significantly lower effective rates than other firms. Our results suggest that political connections are an important determinant of ETR in relationship-based economies.

Item Type: Article
Uncontrolled Keywords: Political connections; Public policy; Effective tax rates; Relationship-based economies
Subjects: H Social Sciences > HF Commerce > HF5601 Accounting
H Social Sciences > HJ Public Finance
Divisions: College of Business
Depositing User: Prof. Madya Dr. Chek Derashid
Date Deposited: 21 Apr 2014 03:56
Last Modified: 21 Apr 2014 03:56
URI: http://repo.uum.edu.my/id/eprint/10657

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