This master's thesis explores the problem of fictitious student work in the period between 2009 and 2013. After examining the then legislation I established that there was a theoretical motivation for taking advantage of student work to pay out the excess profits during the mentioned period. I sought to identify the potential tax evaders with indicator variables based on hypotheses about the tax evaders' behaviour (both students and business entities). I used a probit model to analyse characteristics of the identified business entities, such as the number of employees, the economic activity sector and the way of doing business. Among other things, I found that there was a statistically significant positive effect on the probability of detection of tax evasion in sole traders with up to three employees.
I also studied the impact of potential tax evasion on the company's reported financial performance, specifically, on the return on equity. Through examination of differentiated regression models I established that the change in the adjusted return on equity had a different impact on the change in the volume of student work with tax evaders than with non evaders. In both groups, the impact was positive as expected; however, the impact was estimated at about 0.5 units for identified tax evaders and at about 0.15 units for non evaders. This confirms the hypothesis that business entities took advantage of student work to pay out their excess profits.
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