The Deterrence Effects of Tax Whistleblower Laws: Evidence from New York's False Claims Acts

• 成果类型: Article
• 署名作者: Lee, Yoojin; Ng, Shaphan; Shevlin, Terry; Venkat, Aruhn
• 署名单位: California State University System; California State University Long Beach; Singapore Management University; University of California System; University of California Irvine; University of Washington; University of Washington Seattle; University of Texas System; University of Texas Austin
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2023.02999
• 发表日期: 2025
• 关键词: state tax whistleblower protections; New York's FCA; deterrence effect; tax externalities; Tax avoidance

摘要

In this study, we provide evidence on the effects of state tax whistleblower laws. We exploit a novel 2010 amendment to New York's False Claims Acts (FCA) that explicitly extended whistleblower incentives to corporate income tax whistleblowers. We identify treated firms (firms exposed to New York's FCA) using establishment-level data and descriptive analyses. Using a sample of firms exposed to New York and neighboring states, we find evidence that New York's FCA reduced state tax avoidance. In cross-sectional tests, we find that effects are increasing in firms that grant fewer employee stock options and industry regulation, consistent with deterrence increasing in employee and regulator monitoring. We also find evidence that New York's FCA deterred federal tax avoidance, consistent with positive vertical tax externalities. Next, we focus on particular tax strategies and find evidence of a reduced probability of Double Irish tax structures, reduced relationships to tax planning banks, reduced use of special purpose vehicles, and reduced outbound tax-motivated income shifting. We also find evidence that firms with the lowest (highest) cost of relocation (1) reduced (did not change) establishment counts in New York but (2) did not change (reduced) state tax avoidance. Finally, we disentangle general ex ante deterrence from ex ante peer deterrence using hand-collected New York tax whistleblower press releases from the Attorney General. We find evidence of both types of deterrence. Overall, this study provides policy-relevant evidence on the deterrence effects of tax whistleblower laws.