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Consumer Reactions to Tax Avoidance: Evidence from the United States and Germany

Inga Hardeck (), J. William Harden () and David R. Upton ()
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Inga Hardeck: University of Siegen
J. William Harden: UNC Greensboro
David R. Upton: UNC Greensboro

Journal of Business Ethics, 2021, vol. 170, issue 1, No 6, 75-96

Abstract: Abstract This research investigates the impact of corporate tax strategies (i.e., tax avoidance and non-avoidance) on consumers’ corporate social responsibility (CSR) perceptions, willingness to pay (WTP), and attitude toward the firm in two laboratory experiments (n = 409) in the United States and Germany. Using the Becker–DeGroot–Marschak incentive-compatible mechanism, which avoids a social desirability bias found in prior research, our results indicate only a minor indirect effect of corporate tax strategies on WTP by way of the mediator CSR perceptions. However, we find a strong effect on attitude toward the firm again mostly mediated by CSR perceptions. In contrast to German consumers, U.S. consumers’ CSR perceptions of tax avoidance are independent of whether a strategy is likely accepted by the tax authorities. Overall, we conclude that CSR perceptions are highly relevant when it comes to consumer responses to tax avoidance.

Keywords: BDM; Attitude toward the firm; Corporate social responsibility; Tax avoidance; Tax uncertainty; WTP (search for similar items in EconPapers)
JEL-codes: H26 M41 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1007/s10551-019-04292-8

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