Reciprocity in Corporate Tax Compliance—Evidence from Ozone Pollution

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

View graph of relations

Author(s)

Related Research Unit(s)

Detail(s)

Original languageEnglish
Pages (from-to)1425-1477
Journal / PublicationJournal of Accounting Research
Volume61
Issue number5
Online published26 Jul 2023
Publication statusPublished - Dec 2023

Abstract

In a tax—public goods reciprocity framework between citizens and the state, managers view taxes as a payment to the government in exchange for public goods, and hence they adjust their willingness to pay taxes as public good quality changes. We show that corporate tax planning intensity increases with ground-level ozone pollution. Revisions in ozone pollution regulations cause counties that failed the revised and more stringent standards to reduce ozone pollution. Consequently, firms headquartered in these counties reduced corporate tax planning intensity relative to firms in other counties. The ozone-tax link varies in the predicted directions with public attention to pollution, potential welfare loss due to ozone, managers’ stakeholder orientation, taxpayers’ polluting status, political preferences, and civic norms. We also find consistent results for Superfund cleanups of hazardous waste sites. Our research sheds light on reciprocity as a potential mechanism influencing corporate tax compliance. © 2023 The Chookaszian Accounting Research Center at the University of Chicago Booth School of Business.

Research Area(s)

  • corporate tax, pollution, public goods, reciprocity, tax morale

Citation Format(s)

Reciprocity in Corporate Tax Compliance—Evidence from Ozone Pollution. / CHOW, Travis; FAN, Zhongwen; HUANG, Li et al.
In: Journal of Accounting Research, Vol. 61, No. 5, 12.2023, p. 1425-1477.

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review