Title: Determinants of unreported income in Latin American companies: a business perspective

Authors: Florencia Verónica Pedroni; Anahí Briozzo; Gabriela Pesce

Addresses: Departamento de Ciencias de la Administración, Universidad Nacional del Sur (UNS-DCA), Consejo Nacional de Investigaciones Científicas y Técnicas (CONICET), San Andrés 800, Bahía Blanca (8000), Buenos Aires, Argentina ' Departamento de Ciencias de la Administración, Universidad Nacional del Sur (UNS-DCA), Instituto de Investigaciones Económicas y Sociales del Sur IIESS (UNS-CONICET), San Andrés 800, Bahía Blanca (8000), Buenos Aires, Argentina ' Departamento de Ciencias de la Administración, Universidad Nacional del Sur (UNS-DCA), San Andrés 800, Bahía Blanca (8000), Buenos Aires, Argentina

Abstract: This study aims to empirically identify factors associated with unreported income in Latin American registered firms. We use World Bank Enterprise Survey 2017 data from Argentina, Bolivia, Ecuador, Paraguay, Peru, and Uruguay. We find that the propensity of a company to underreport income increases when corruption, taxes, bureaucracy, regulation, justice, access to finance, and sector informality are considered an obstacle to business operations; when firms are smaller, from the commercial sector, domestic owned, sell mainly in national markets, have at least one female owner or are from Bolivia. Otherwise, this probability decreases for companies that have certified financial statements or international quality certifications, and when political instability represents the greatest difficulty. This article provides updated information of business informality determinants in Latin America with very recent data from six countries, which is an opportunity to design specific development policies in the region.

Keywords: informal sector; tax evasion; underground economy; firm-level determinants.

DOI: 10.1504/IJEPEE.2022.124660

International Journal of Economic Policy in Emerging Economies, 2022 Vol.16 No.1, pp.58 - 83

Received: 13 Feb 2020
Accepted: 07 Jun 2020
Published online: 01 Aug 2022 *

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