Corporate culture and tax planning

Mansoor Afzali () and Timmy Thor ()
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Mansoor Afzali: Hanken School of Economics
Timmy Thor: Hanken School of Economics

Review of Quantitative Finance and Accounting, 2025, vol. 64, issue 2, No 11, 898 pages

Abstract: Abstract In this paper, we study the relationship between corporate culture and tax planning. Using the competing values framework and natural language processing techniques, we document that firms with collaboration-oriented (control-oriented) corporate cultures are associated with lower (higher) effective tax rates. We further find that firms with collaboration-oriented corporate cultures achieve these tax savings by engaging in tax-sheltering activities and that such savings positively affect firm value. While firms with salient control-oriented characteristics have previously been recognized to benefit from small tax burdens, we contribute with new evidence suggesting that intra-organizational reciprocity also promote tax savings that ultimately benefit shareholders.

Keywords: Corporate culture; Competing values framework; Text analysis; Tax planning; Tax sheltering; Firm value (search for similar items in EconPapers)
JEL-codes: H26 M14 M41 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s11156-024-01320-1

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