Tax Boycotts

57 Pages Posted: 30 Mar 2021

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 2, 2022

Abstract

To what extent do consumers boycott in response to corporate tax activities? Anecdotes suggest potential consumer backlash is a meaningful deterrent to corporate tax planning, and the tax literature has developed expectations that these boycotts happen. But empirical evidence on their existence and impact is limited. We undertake a comprehensive study to examine how consumers’ purchase behavior relates to corporate tax activities, triangulating across several designs, samples, and measures. First, we survey a representative sample of U.S. consumers to examine the reported relationship between corporate tax planning and consumer behavior; we find that consumers report that precisely zero have ever boycotted a firm because of tax planning. Next, we use a granular dataset of retail scanner data to directly observe consumer purchase activity and find no consumer purchase response to negative tax news. Next, we use GPS location data to examine individual foot traffic activity at retail establishments and find little evidence that consumers change their shopping activities in response to tax news. Finally, we conduct several supplementary analyses investigating the potential consumer responses related to other corporate events. The combined evidence does not support tax boycotts as a meaningful consumer response to corporate tax activities, despite managers’ expressed concerns of tarnished consumer reputations related to firms’ tax decisions.

Keywords: tax boycotts, corporate tax activities, consumer survey, scanner data, foot traffic

JEL Classification: H25, M31, M41

Suggested Citation

Asay, Hamilton Scott and Hoopes, Jeffrey L. and Thornock, Jacob and Wilde, Jaron H., Tax Boycotts (March 29, 2021). Available at SSRN: https://ssrn.com/abstract=3815192 or http://dx.doi.org/10.2139/ssrn.3815192

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 )

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

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