The Effect of Tax Uncertainty on Firm Decision-Making

Last registered on March 15, 2024
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Pre-Trial

Trial Information

General Information

Title
The Effect of Tax Uncertainty on Firm Decision-Making
RCT ID
AEARCTR-0013142
Initial registration date
March 05, 2024

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
March 15, 2024, 3:16 PM EDT

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

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Primary Investigator

Name
Fabian Eble
Affiliation
University of Mannheim
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Other Primary Investigator(s)

PI Name
Philipp Doerrenberg
PI Affiliation
University of Mannheim
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PI Name
Davud Rostam-Afschar
PI Affiliation
University of Mannheim
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PI Name
Maik Sattelmaier
PI Affiliation
University of Mannheim
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PI Name
Johannes Voget
PI Affiliation
University of Mannheim
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Additional Trial Information

Status
In development
Start date
2024-03-07
End date
2025-04-01
Keywords
Behavior, Firms & Productivity
Additional Keywords
tax uncertainty, survey, firms, investment, experiment
JEL code(s)
D22, D25, H25, H32
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
We study the effect of profit tax uncertainty on firms' investment plans and firms' acquisition of information regarding profit taxes.
External Link(s)

Registration Citation

Citation
Doerrenberg, Philipp et al. 2024. "The Effect of Tax Uncertainty on Firm Decision-Making." AEA RCT Registry. March 15. https://doi.org/10.1257/rct.13142-1.0
Sponsors & Partners
Experimental Details

Interventions

Intervention(s)
Intervention Start Date
2024-04-01
Intervention End Date
2025-04-01

Primary Outcomes

Primary Outcomes (end points)
- Survey question in which firms specify their expectations regarding the development of their profit taxes
- Survey question in which firm managers specify the percentage of revenue to use for investments
- Survey question in which firm managers specify the amount of money they are willing to pay to get access to a yearly expert report on the development of profit taxes
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
- Survey question in which firm managers specify the type of investments
- Survey question in which firm managers specify their level of tax knowledge
- Survey question in which firm managers specify their risk attitude
- Survey question in which firm managers specify if profit taxes are taken into consideration when firms decide on large investment projects
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
First Survey - Experts:
Expert survey in which experts specify their expectations regarding the firm profit tax development in Germany. We use aggregated information of experts regarding profit taxes in the second survey with firms.
Experts are selected on the basis of their academic expertise on the German tax system and whether they have an internet presence at a German faculty or research institution.

Second Survey - Firm Survey:
Participating firms fill out a survey relating to profit tax uncertainty and investment plans. This second survey includes a survey experiment in which we make use of aggregated information from our survey with experts.
Experimental Design Details
Not available
Randomization Method
By computer.

Specifically: We create 5 random numbers before the treatment in the survey. Firms are not able to see these random numbers, because it is hidden. Participants receiving the number 1 and 2 are the high uncertainty group. Number 3 and 4 -> Low uncertainty group. Number 5 -> control group. Basically, we have then 40% for the high uncertainty group and 40% for the low uncertainty group. 20% for control group.

Randomization Unit
Firm
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
1000
Sample size: planned number of observations
1000
Sample size (or number of clusters) by treatment arms
40% of participants in the group "low uncertainty", 40% of participants in the group "high uncertainty", 20% of participants in control group (mean treatment).
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Assumptions: - Power (1-ß): 0,80 - Type I error rate: 0,05 - Delta: 0.4 percentage points (4.4% - 4%) - Equally Sized Groups (low and high uncertainty treatments) - Standard deviation: 2 percentage points Outcome Variable: Percentage of revenue used for large investment projects. Stata Code: power twomeans 4 4.4, power(0.8) sd(2) Based on our assumptions above, we expect to detect a treatment effect of 20 percent of a standard deviation (0.4/2), i.e., we expect to detect a potential decrease in the percentage of revenue invested between the low and high uncertainty treatments. This requires a sample size of around 1000 respondents (400 - low uncertainty group; 400 - high uncertainty group; 200 - Control Mean Group).
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
IRB Approval Date
IRB Approval Number
Analysis Plan