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A cointegration analysis of tax evasion, corruption and entrepreneurship in OECD countries

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  • Mohsen Mohammadi Khyareh

Abstract

This paper explores the long-run relationship among tax evasion, corruption and different stages of entrepreneurial activities for 31 OECD countries based on a series of annual data during the period of 2000–2010. The analysis was conducted using Dynamic Ordinary Least Squares (DOLS) and Fully Modified OLS (FMOLS) approaches. The results clearly suggest the existence of a statistically significant long-run relationship between Tax evasion, corruption and entrepreneurial activities. In addition, the findings reveal that (1) corruption has a negative impact on all three stages of entrepreneurial motivation, total entrepreneurship activity and established entrepreneurship, and (2) using the DOLS and FMOLS estimates, tax evasion has a negative effect on the TEA and established entrepreneurship, while it has a positive impact on the entrepreneurial motivation. Consequently, if entrepreneurship is one of the main drivers of economic growth, policymakers and the government should simultaneously adopt policies to combat corruption and reduce institutional weaknesses when trying to reduce tax evasion.

Suggested Citation

  • Mohsen Mohammadi Khyareh, 2019. "A cointegration analysis of tax evasion, corruption and entrepreneurship in OECD countries," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 32(1), pages 3627-3646, January.
    • Handle: RePEc:taf:reroxx:v:32:y:2019:i:1:p:3627-3646
    DOI: 10.1080/1331677X.2019.1674175
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    Cited by:

    1. Julita E. Wasilczuk & Katarzyna Stankiewicz, 2022. "It is not OK but it works – unproductive entrepreneurship, the case of Poland," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 35(1), pages 2943-2959, December.
    2. Amzuică Bogdan – Florian & Mititelu Roxana – Adriana & Nișulescu Ileana, 2023. "Digitalization of Business – Implications on Tax Evasion Dimensions," Proceedings of the International Conference on Business Excellence, Sciendo, vol. 17(1), pages 1888-1896, July.

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