Media Coverage of Corporate Taxes

61 Pages Posted: 5 Nov 2015 Last revised: 12 Jul 2018

See all articles by Shannon Chen

Shannon Chen

University of Arizona - Department of Accounting

Kathleen Powers

University of Tennessee, Knoxville - College of Business Administration

Bridget Stomberg

Indiana University - Kelley School of Business

Date Written: June 27, 2018

Abstract

Managers express growing concern over media coverage of corporate taxes, yet no large-sample empirical study examines this phenomenon. As a first step to fill this void, we identify factors associated with the likelihood and negative tone of media tax coverage and examine firms’ tax avoidance behavior following media tax coverage. We find the likelihood of media tax coverage is greater for firms with GAAP effective tax rates below the top U.S. statutory rate of 35 percent and for firms with greater visibility. The degree of negative tone is increasing in cash tax avoidance and firm size. We also find evidence of more frequent and more negative tax coverage during economic recessions. We find no evidence that firms reduce their tax avoidance following media coverage. Although our analyses are subject to limitations, our results suggest the media may not have the same influence over corporate tax policy as other external stakeholders.

Keywords: Role of the media, Tax planning, Tax disclosure

JEL Classification: H25, H26, H20, M41, G39

Suggested Citation

Chen, Shannon and Powers, Kathleen and Stomberg, Bridget, Media Coverage of Corporate Taxes (June 27, 2018). Available at SSRN: https://ssrn.com/abstract=2686333 or http://dx.doi.org/10.2139/ssrn.2686333

Shannon Chen (Contact Author)

University of Arizona - Department of Accounting ( email )

Tucson, AZ 85721
United States

Kathleen Powers

University of Tennessee, Knoxville - College of Business Administration ( email )

Haslam Business Building
Knoxville, TN
United States

Bridget Stomberg

Indiana University - Kelley School of Business ( email )

1309 East Tenth Street
Indianapolis, IN 47405-1701
United States

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