Is Corporate Tax Avoidance Related to Employee Treatment?
Document Type
Article
Publication Date
12-2022
Abstract
This paper investigates the empirical association between corporate tax avoidance and employee treatment. Using both aggressive and innocuous tax avoidance measures and MSCI ESG’s “Employee Relations” dimension, we provide strong evidence of a positive relationship between the two constructs. Our findings are robust to various measures of corporate tax avoidance and employee treatment. Our testing also indicates that the positive relationship is driven by the “strengths” dimension of employee treatment for risky tax avoidance and “concerns” for innocuous tax avoidance. Taken together, our study’s results are consistent with the theories of labor incidence and compensating differentials and suggest that employees require a compensation premium for bearing the increased financial risks resulting from CTA.
Publication
Journal of Empirical Finance
Publisher
Elsevier - ScienceDirect
Volume
69
Pages
63-80
Department
College of Business and Management
Recommended Citation
Schochet, S., Benlemlih, M., & Jaballah, J. (2022). Is corporate tax avoidance related to employee treatment? Journal of Empirical Finance, 69, 63–80. https://doi.org/10.1016/j.jempfin.2022.08.002
Comments
Received 1 March 2021, Revised 6 July 2022, Accepted 17 August 2022, Available online 27 August 2022, Version of Record 2 September 2022.