Supply Chain Transparency: Reducing Tax Evasion and Crash Risk

According to agency theory, tax evasion and management's concealment of negative news are positively correlated, potentially leading to an accumulation of crash risk. The complexity of supply chain activities makes it difficult for stakeholders to obtain accurate information, creating an environment conducive to corporate tax evasion. This opaque information environment allows for the manipulation of financial data and the concealment of negative news, contributing to a higher likelihood of financial distress. By increasing supply chain transparency, stakeholders can access more reliable information, reducing the opportunities for tax evasion and ultimately suppressing the growth of crash risk. This improved transparency fosters accountability and trust, creating a more robust and sustainable business environment.