Does it cost to be politically connected? An examination of the grabbing hand hypothesis using corporate taxes

Taufiq Arifin, Rezaul Kabir, Iftekhar Hasan

Research output: Contribution to conferencePaperAcademicpeer-review

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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 languageEnglish
Number of pages38
Publication statusPublished - 29 May 2019
Event42nd Annual Congress of the European Accounting Association, EAA 2019 - Aliathon Holiday Village Hotel, Paphos, Cyprus
Duration: 29 May 201931 May 2019
Conference number: 42

Conference

Conference42nd Annual Congress of the European Accounting Association, EAA 2019
Abbreviated titleEAA
CountryCyprus
CityPaphos
Period29/05/1931/05/19

Fingerprint

Elections
Corporate tax
Politicians
Tax
Costs
Tax revenues
Firm resources
Economic indicators
Incentives
Political regime
Rent-seeking
Vote
Exogenous shocks
Incumbents

Keywords

  • political connections
  • corporate taxes
  • elections

Cite this

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.
Arifin, Taufiq ; Kabir, Rezaul ; Hasan, Iftekhar. / 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.38 p.
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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, 29/05/19 - 31/05/19, .

Does it cost to be politically connected? An examination of the grabbing hand hypothesis using corporate taxes. / Arifin, Taufiq ; Kabir, Rezaul; Hasan, Iftekhar.

2019. Paper presented at 42nd Annual Congress of the European Accounting Association, EAA 2019, Paphos, Cyprus.

Research output: Contribution to conferencePaperAcademicpeer-review

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Arifin T, Kabir R, Hasan I. Does it cost to be politically connected? An examination of the grabbing hand hypothesis using corporate taxes. 2019. Paper presented at 42nd Annual Congress of the European Accounting Association, EAA 2019, Paphos, Cyprus.