A real option approach to sustainable corporate tax behavior

Anne Van de Vijver*, Danny Cassimon, Peter Jan Engelen

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review


Aggressive tax planning has become a sustainability problem, as governments have to cope with less tax revenue, which is crucial for investments in sustainable development goals. The OECD and the EU authorities have taken several initiatives against aggressive tax planning, such as the Action Plan against BEPS. However, these initiatives lack effectiveness, and aggressive tax planning is still omnipresent. We analyze the fight against aggressive corporate tax planning from a Real Option Theory perspective, in order to find an explanation for the difficult shift of companies' aggressive tax planning strategies to more sustainable tax behavior. The Real Option Theory shows that, as long as the option to 'delay' the investment in sustainable tax behavior has too much value because the benefits of such investment are uncertain, companies will wait. Based on this new understanding, we suggest additional public policy interventions against aggressive tax planning. These interventions aim directly at reducing this real option value (of waiting).

Original languageEnglish
Article number5406
Number of pages17
JournalSustainability (Switzerland)
Issue number13
Publication statusPublished - 1 Jul 2020


  • Aggressive tax planning
  • BEPS
  • Real option theory
  • Sustainability
  • Tax avoidance


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