Journal article
Public Pressure and Corporate Tax Behavior
Journal of accounting research, Vol.54(1), pp.147-186
03/2016
DOI: 10.1111/1475-679X.12101
Abstract
We use a shock to the public scrutiny of firm subsidiary locations to investigate whether that scrutiny leads to changes in firms' disclosure and corporate tax avoidance behavior. ActionAid International, a nonprofit activist group, levied public pressure on noncompliant U.K. firms in the FTSE 100 to comply with a rule requiring U.K. firms to disclose the location of all of their subsidiaries. We use this setting to examine whether the public pressure led scrutinized firms to increase their subsidiary disclosure, decrease tax avoidance, and reduce the use of subsidiaries in tax haven countries compared to other firms in the FTSE 100 not affected by the public pressure. The evidence suggests that the public scrutiny sufficiently changed the costs and benefits of tax avoidance such that tax expense increased for scrutinized firms. The results suggest that public pressure from outside activist groups can exert a significant influence on the behavior of large, publicly traded firms. Our findings extend prior research that has had little success documenting an empirical relation between public scrutiny of tax avoidance and firm behavior.
Details
- Title: Subtitle
- Public Pressure and Corporate Tax Behavior
- Creators
- Scott D. Dyreng - Duke UniversityJeffrey L. Hoopes - Fisher CollegeJaron H. Wilde - University of Iowa
- Resource Type
- Journal article
- Publication Details
- Journal of accounting research, Vol.54(1), pp.147-186
- Publisher
- Wiley
- DOI
- 10.1111/1475-679X.12101
- ISSN
- 0021-8456
- eISSN
- 1475-679X
- Number of pages
- 40
- Grant note
- Center for International Business Education & Research at Ohio State University
- Language
- English
- Date published
- 03/2016
- Academic Unit
- Accounting
- Record Identifier
- 9984380511702771
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