Tax Planning Knowledge Diffusion via the Labor Market

John Barrios and John Gallemore

No 28775, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We examine the extent to which the labor market facilitates the diffusion of tax planning knowledge across firms. Using a novel dataset of tax department employee movements between S&P 1500 firms, we find that firms experience an increase in their tax planning after hiring a tax employee from a tax aggressive firm. This finding is robust to various research designs and specifications. Consistent with tax planning knowledge driving this result, we find that the tax planning benefit of hiring an employee from a tax aggressive firm is stronger when the employee has more tax experience and is hired into a senior tax department role, and when the hiring firm likely had less tax planning knowledge prior to the hire. Further tests suggest that tax planning knowledge is highly specific in nature: the increase in tax avoidance is larger when the hiring and former firms are similar (i.e., operating in the same sector or having similar foreign operations), and firms are more likely to hire tax department employees from firms with similar characteristics. Our study documents the first-order role of the labor market in the diffusion of tax planning knowledge across firms, and suggests that tax department human capital is a central determinant of tax planning outcomes.

JEL-codes: H25 H26 J20 J24 J4 J44 J60 (search for similar items in EconPapers)
Date: 2021-05
New Economics Papers: this item is included in nep-lma, nep-net and nep-pbe
Note: CF LS PE
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Published as John M. Barrios & John Gallemore, 2024. "Tax Planning Knowledge Diffusion via the Labor Market," Management Science, vol 70(2), pages 1194-1215.

Downloads: (external link)
http://www.nber.org/papers/w28775.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:28775

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w28775

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().