Are Socially-Responsible Firms Less Likely to Expatriate? An Examination of Corporate Inversions

Posted: 18 Mar 2017 Last revised: 29 Mar 2017

See all articles by Henry He Huang

Henry He Huang

Yeshiva University - Sy Syms School of Business

Li Sun

Ball State University

T. Robert Yu

University of Wisconsin - Whitewater

Date Written: January 2, 2015

Abstract

This study examines whether corporate social responsibility (CSR) is related to the likelihood of corporate inversions, a legal tax planning strategy. We use a full sample to test stakeholder theory and a risk-management view of CSR. We find that firms with higher CSR performance are less likely to expatriate compared to firms with lower CSR performance. Although equity investors react positively to inversion announcements, we find that the reaction is less positive for firms with higher CSR ratings. These results are consistent with stakeholder theory. We do not find evidence that inversion firms experience significant improvements in operating performance after inversion. Overall, this study improves our understanding of the role of CSR in corporate expatriation decisions and has practical implications for a firm’s stakeholders.

Keywords: Corporate Social Responsibility; Corporate Expatriation; Inversion; Tax Avoidance; Tax Aggressiveness

JEL Classification: H20; M14; M41

Suggested Citation

Huang, Henry and Sun, Li and Yu, Tong, Are Socially-Responsible Firms Less Likely to Expatriate? An Examination of Corporate Inversions (January 2, 2015). Journal of American Taxation Association, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2934601

Henry Huang

Yeshiva University - Sy Syms School of Business ( email )

New York, NY 10033
United States
8322763834 (Phone)

Li Sun

Ball State University ( email )

Muncie, IN 47306-0340
United States

Tong Yu (Contact Author)

University of Wisconsin - Whitewater ( email )

Department of Accounting
College of Business and Economics
Whitewater, WI 53190
United States
262-472-6965 (Phone)

Register to save articles to
your library

Register

Paper statistics

Abstract Views
396
PlumX Metrics