Labor unions and tax aggressiveness

James A. Chyz, Winnie Siu Ching Leung, Oliver Zhen Li and Oliver Rui

Journal of Financial Economics, 2013, vol. 108, issue 3, 675-698

Abstract: We examine the impact of unionization on firms' tax aggressiveness. We find a negative association between firms' tax aggressiveness and union power and a decrease in tax aggressiveness after labor union election wins. This relation is consistent with labor unions influencing managers' in one, or both, of two ways: (1) constraining managers' ability to invest in tax aggressiveness through increased monitoring; or (2) decreasing returns to tax aggressiveness that arise from unions' rent seeking behavior. We also find preliminary evidence that the market expects these reductions around union elections and discounts firms that likely add shareholder value via aggressive tax strategies.

Keywords: Labor union; Tax aggressiveness (search for similar items in EconPapers)
JEL-codes: H25 J53 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (88)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:108:y:2013:i:3:p:675-698

DOI: 10.1016/j.jfineco.2013.01.012

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