cover_journal-of-accounting-research.jpg

Does Social Capital Matter in Corporate Decisions? Evidence from Corporate Tax Avoidance

Iftekhar Hasan Chun-Keung (Stan) Hoi Qiang Wu Hao Zhang

in: Journal of Accounting Research, No. 3, 2017

Abstract

We investigate whether the levels of social capital in U.S. counties, as captured by strength of civic norms and density of social networks in the counties, are systematically related to tax avoidance activities of corporations with headquarters located in the counties. We find strong negative associations between social capital and corporate tax avoidance, as captured by effective tax rates and book-tax differences. These results are incremental to the effects of local religiosity and firm culture toward socially irresponsible activities. They are robust to using organ donation as an alternative social capital proxy and fixed effect regressions. They extend to aggressive tax avoidance practices. Additionally, we provide corroborating evidence using firms with headquarters relocation that changes the exposure to social capital. We conclude that social capital surrounding corporate headquarters provides environmental influences constraining corporate tax avoidance.

read publication

cover_journal-of-financial-and-Quantitative-Analysis.gif

Social Capital and Debt Contracting: Evidence from Bank Loans and Public Bonds

Iftekhar Hasan Chun-Keung (Stan) Hoi Qiang Wu Hao Zhang

in: Journal of Financial and Quantitative Analysis, No. 3, 2017

read publication
Mitglied der Leibniz-Gemeinschaft LogoTotal-Equality-LogoWeltoffen Logo