Public Pressure and Corporate Tax Behavior

• 成果类型: Article
• 署名作者: Dyreng, Scott D.; Hoopes, Jeffrey L.; Wilde, Jaron H.
• 署名单位: Duke University; University System of Ohio; Ohio State University; University of Iowa
• 刊物名称: JOURNAL OF ACCOUNTING RESEARCH
• ISSN/ISSBN: 0021-8456
• DOI: 10.1111/1475-679X.12101
• 发表日期: 2016
• 页码: 147-186
• 关键词: AVOIDANCE; incentives; OWNERSHIP; earnings; COSTS; pay

摘要

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.