An integrative model in predicting corporate tax fraud
| Published date | 30 September 2014 |
| DOI | https://doi.org/10.1108/JFC-03-2013-0012 |
| Date | 30 September 2014 |
| Pages | 424-432 |
| Author | Nor Azrina Mohd Yusof,Ming Ling Lai |
| Subject Matter | Accounting & Finance,Financial risk/company failure,Financial crime |
An integrative model in
predicting corporate tax fraud
Nor Azrina Mohd Yusof
Faculty of Accountancy, Universiti Teknologi Mara, Selangor,
Malaysia, and
Ming Ling Lai
Faculty of Accountancy and Accounting Research Institute,
Universiti Teknologi Mara, Selangor, Malaysia
Abstract
Purpose – This paper aims to present an integrative model in predicting corporate tax fraud.
Design/methodology/approach – This paper is grounded on three theories, namely, the theory of
reasoned action, theory of planned behaviour and the “Fraud Diamond Theory”.
Findings – By integrating these three theories, this paper proposes that individual cognitive factors,
fraud diamond factors and organizational factors such as normative and control factors inuence
managers to commit corporate tax fraud.
Practical implications – Practically, the proposed integrative model enables the government and
tax authority to understand on why corporate managers engage in corporate tax fraud. It will also allow
them to devise practical methods and strategies to prevent the corporate managers to engage in tax
fraud.
Originality/value – This study has merit that proposed an integrative model in predicting corporate
tax fraud. Research on corporate tax fraud has been the subject of limited investigation; hence, this
study contributes to the tax compliance literature by proposing an integrative model to study corporate
tax fraud in a Malaysian tax setting. Future studies can be conducted to test the proposed integrative
model in examining the circumstances of managers’ intention to commit corporate tax fraud.
Keywords Theory of planned behaviour, Theory of reasoned action, Corporate manager,
Fraud diamond theory, Tax fraud
Paper type Conceptual paper
1. Introduction
In general, individual taxpayers engage in tax frauds out of personal interests or for
self-gain. However, unlike individual taxpayers, most corporate tax frauds are due to the
misconducts of their managers. Corporate managers commit tax frauds either for
personal interest and/or organizational reasons (e.g. to maintain stock price and
stakeholders’ interest). Corporate managers tend to evade tax and/or deliberately
commit tax frauds through the manipulation of nancial statements such as
under-reporting revenues and overstating expenses. Beasley et al. (2010) stated that the
An earlier version of this paper was presented at the 5th Global Business and Social Science
Research Conference, 25-26th June 2012, at the Radisson Blue Hotel, Chaoyang District, Beijing,
China. The funding from Accounting Research Institute, Ministry of Higher Education Malaysia
[Ref: 100-RMI/ARI 16/6/2 (43/2010)] is gratefully acknowledged. The authors also thank the
participants for their insightful comments.
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1359-0790.htm
JFC
21,4
424
Journal of Financial Crime
Vol. 21 No. 4, 2014
pp. 424-432
© Emerald Group Publishing Limited
1359-0790
DOI 10.1108/JFC-03-2013-0012
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