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Is Corporate Tax Avoidance Related to Employee Treatment?

Author

Listed:
  • S. Schochet

    (Brooklyn College [CUNY] - CUNY - City University of New York [New York])

  • M. Benlemlih

    (Métis Lab EM Normandie - EM Normandie - École de Management de Normandie)

  • Jamil Jaballah

    (EESC-GEM Grenoble Ecole de Management)

Abstract

This paper investigates the empirical association between corporate tax avoidance and employee treatment. Using both aggressive and innocuous tax avoidance measures and MSCI ESG's ``Employee Relations'' dimension, we provide strong evidence of a positive relationship between the two constructs. Our findings are robust to various measures of corporate tax avoidance and employee treatment. Our testing also indicates that the positive relationship is driven by the ``strengths'' dimension of employee treatment for risky tax avoidance and ``concerns'' for innocuous tax avoidance. Taken together, our study's results are consistent with the theories of labor incidence and compensating differentials and suggest that employees require a compensation premium for bearing the increased financial risks resulting from CTA. © 2022 Elsevier B.V.

Suggested Citation

  • S. Schochet & M. Benlemlih & Jamil Jaballah, 2022. "Is Corporate Tax Avoidance Related to Employee Treatment?," Grenoble Ecole de Management (Post-Print) hal-04454690, HAL.
    • Handle: RePEc:hal:gemptp:hal-04454690
    DOI: 10.1016/j.jempfin.2022.08.002
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    Cited by:

    1. Jiang, Xiandeng & Huang, Ruoyao & Wang, Chuanjie, 2023. "Tax enforcement and efficiency wages: Evidence from China’ Golden Tax Project III," Finance Research Letters, Elsevier, vol. 58(PB).
    2. Devos, Erik & Rahman, Shofiqur, 2023. "Does labor unemployment insurance affect corporate tax aggressiveness?," International Review of Financial Analysis, Elsevier, vol. 90(C).

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