Is Stakeholder Orientation Related to Corporate Tax Avoidance? New Evidence

Kenny Z. LIN, Shijie YANG, Hong ZOU

Research output: Journal PublicationsJournal Article (refereed)peer-review

Abstract

Our study examines how constituency statutes influence corporate tax avoidance. These state-level laws allow corporate boards to consider the interests of all stakeholders, not just shareholders, in their decisions. Using recent econometric advances in staggered difference-in-differences estimations, we find that after these laws are adopted, firms affected by these laws reduce their tax avoidance. This effect is stronger in firms that previously avoid more taxes or have lower corporate social responsibility ratings. Our study provides valuable insights into how stakeholder orientation influences tax behavior, offering practical implications for both corporate managers and policymakers.
Original languageEnglish
Number of pages20
JournalAccounting Horizons
DOIs
Publication statusE-pub ahead of print - 15 Jan 2025

Bibliographical note

We are grateful for the insightful and constructive comments from Eric Allen, Stan Hoi, Clive Lennox, Woon-Sau Leung, Lorien Stice-Lawrence, Lilian Mills, Estelle Sun, Luo Zuo, seminar participants at University of Bath, University of Bristol, The University of Hong Kong, and University of Surrey, and participants of the 2018 Massachusetts Institute of Technology Asia Accounting Conference for helpful comments.

Funding

Kenny Z. Lin acknowledges partial financial support from Lingnan University. Shijie Yang gratefully acknowledges financial support from the Key Project of the National Natural Science Foundation of China [No. 72432005]. Hong Zou thanks the support of The University of Hong Kong Seed Fund for Basic Research [No. 201711159124].

Keywords

  • CSR
  • stakeholder orientation
  • tax avoidance
  • staggered difference-in-differences

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