A silver lining in the tax compliance cloud? A study of the managerial benefits of tax compliance in small business

Abstract

This paper considers the potential managerial benefits that a small business taxpayer may derive as a result of undertaking tax compliance work. Managerial benefits are expected to come in the form of improved information systems, improved controls, or savings on accountant costs or other compliance costs. The scarce empirical evidence on managerial benefits suggests that they may be significant and that they are more likely to arise in small businesses with less developed accounting systems. Several theoretical issues have hampered research on managerial benefits: tax and accounting related activities are often entangled and managerial benefits are difficult to measure because of their ambiguous nature. The paper concludes by outlining a research project on managerial benefits in the form of research hypotheses and research questions