Abstract
We study a channel through which politicians use corporate taxes to extract firm’s resources. We find that politically-connected firms pay higher taxes than their non-connected counterparts. Using election as an exogenous shock, we also observe that politically-connected firms pay higher taxes during election years to support the incumbent political regime. The results of the study indicate that favorable economic indicators, e.g. tax revenue, are vitally important to politicians and provide rent seeking incentive to achieve their political objective, e.g. gaining votes.
| Original language | English |
|---|---|
| Number of pages | 38 |
| Publication status | Published - 29 May 2019 |
| Event | 42nd Annual Congress of the European Accounting Association, EAA 2019 - Aliathon Holiday Village Hotel, Paphos, Cyprus Duration: 29 May 2019 → 31 May 2019 Conference number: 42 |
Conference
| Conference | 42nd Annual Congress of the European Accounting Association, EAA 2019 |
|---|---|
| Abbreviated title | EAA |
| Country | Cyprus |
| City | Paphos |
| Period | 29/05/19 → 31/05/19 |
Keywords
- political connections
- corporate taxes
- elections
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Arifin, T., Kabir, R., & Hasan, I. (2019). Does it cost to be politically connected? An examination of the grabbing hand hypothesis using corporate taxes. Paper presented at 42nd Annual Congress of the European Accounting Association, EAA 2019, Paphos, Cyprus.