Consumer Responses to Corporate Tax Planning

41 Pages Posted: 15 Aug 2018

See all articles by H. Scott Asay

H. Scott Asay

University of Iowa - Department of Accounting

Jeffrey L. Hoopes

University of North Carolina (UNC) at Chapel Hill - Accounting Area

Jacob R. Thornock

Brigham Young University

Jaron H. Wilde

University of Iowa - Henry B. Tippie College of Business

Date Written: July 31, 2018

Abstract

Prior research examines practitioner, investor, and executive perceptions of corporate tax planning. However, little is known about how the typical U.S. consumer views corporate tax planning. We examine consumers’ perceptions of corporate tax planning using both survey and experimental methods. First, we survey U.S. consumers and find that while most express negative preferences for tax planning, they rank it at the bottom of purchase decision factors. Few consumers recall ever seeing a negative media article about taxes. Thus, while consumers state a preference against corporate tax planning, that preference is not particularly strong. However, for the minority of consumers who have read negative articles about a firm’s tax planning, a significant portion claim to have changed their purchasing behavior accordingly. Second, we use an experiment to investigate the consumer effects of tax planning, randomly treating consumers with exposure to news about tax planning and imposing real economic consequences on the participants. We find that consumers exposed to negative tax information about a firm are significantly less likely to prefer receiving a gift card from that firm, suggesting that there is an effect of tax planning on consumer preferences even in the presence of a real economic consequence.

Keywords: tax planning, consumer behavior, reputational costs of tax planning

JEL Classification: H25, H26, M41, M38

Suggested Citation

Asay, Hamilton Scott and Hoopes, Jeffrey L. and Thornock, Jacob and Wilde, Jaron H., Consumer Responses to Corporate Tax Planning (July 31, 2018). Kenan Institute of Private Enterprise Research Paper No. 18-19, Available at SSRN: https://ssrn.com/abstract=3224670 or http://dx.doi.org/10.2139/ssrn.3224670

Hamilton Scott Asay

University of Iowa - Department of Accounting ( email )

S232 Pappajohn Business Building
Iowa City, IA 52242-1000
United States

Jeffrey L. Hoopes (Contact Author)

University of North Carolina (UNC) at Chapel Hill - Accounting Area ( email )

McColl Building
Chapel Hill, NC 27599-3490
United States

Jacob Thornock

Brigham Young University ( email )

Provo, UT 84602
United States
8014220828 (Phone)

Jaron H. Wilde

University of Iowa - Henry B. Tippie College of Business ( email )

Acquisitions
5020 Main Library
Iowa City, IA 52242-1000
United States

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