Tax Boycotts

52 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: March 29, 2021

Abstract

To what extent do consumers boycott in response to corporate tax planning? Anecdotes suggest consumer boycotts are a meaningful deterrent to tax planning, but empirical evidence on their frequency and impact is lacking. We undertake a comprehensive study to examine how consumers’ purchase behavior relates to corporate tax planning. First, we survey a representative sample of U.S. consumers and find that more than a third of survey participants report having boycotted a firm, but zero report having done so for taxes. Next, we use a granular dataset of nationwide Nielsen weekly purchase transactions to analyze consumer purchase behavior around corporate tax planning news events. Across a battery of tests, we find little evidence of changes in actual consumer purchase behavior in response to tax news. Finally, we conduct several supplementary analyses investigating the potential consumer responses related to a high-profile and salient tax event, ongoing tax-related boycott activity, and retail investors’ trading behavior. The combined evidence does not support tax boycotts as a meaningful response to corporate tax planning, despite managers’ expressed concerns of tarnished consumer reputations related to firms’ tax decisions.

Keywords: corporate tax planning, consumer boycotts, reputational effects of tax planning

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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