Reputational Risk and Corporate Tax Planning

47 Pages Posted: 22 Nov 2021

See all articles by Raffael Speitmann

Raffael Speitmann

Vienna University of Economics and Business

Date Written: November 2021

Abstract

Corporate tax behavior has recently received considerable public interest, and anecdotal evidence suggests that firms are increasingly concerned about the reputational risk of tax planning. Using RepRisk data to capture firms’ reputational risk due to public scrutiny, this study examines the relationship between reputational risk and corporate tax planning. If managers anticipate higher costs of tax planning in response to higher reputational risk, firms might adjust their tax behavior. My results suggest that firms initially react to more public scrutiny and report higher GAAP effective tax rates. However, this association reverses once public scrutiny decays, suggesting that firms make rather superficial changes of their tax behavior in response to public pressure.

Keywords: Reputational risk, Tax planning, Reputational cost

JEL Classification: H20, H25, H26, M41

Suggested Citation

Speitmann, Raffael, Reputational Risk and Corporate Tax Planning (November 2021). WU International Taxation Research Paper Series No. 2021-11, Available at SSRN: https://ssrn.com/abstract=3966319 or http://dx.doi.org/10.2139/ssrn.3966319

Raffael Speitmann (Contact Author)

Vienna University of Economics and Business ( email )

Welthandelsplatz 1
Vienna, Wien 1020
Austria

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