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

Author

Listed:
  • Inga Hardeck

    (University of Siegen)

  • J. William Harden

    (UNC Greensboro)

  • David R. Upton

    (UNC Greensboro)

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.

Suggested Citation

  • Inga Hardeck & J. William Harden & David R. Upton, 2021. "Consumer Reactions to Tax Avoidance: Evidence from the United States and Germany," Journal of Business Ethics, Springer, vol. 170(1), pages 75-96, April.
    • Handle: RePEc:kap:jbuset:v:170:y:2021:i:1:d:10.1007_s10551-019-04292-8
    DOI: 10.1007/s10551-019-04292-8
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    More about this item

    Keywords

    BDM; Attitude toward the firm; Corporate social responsibility; Tax avoidance; Tax uncertainty; WTP;
    All these keywords.

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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