Labor Unions and Tax Aggressiveness

James A. Chyz (First Author), Oliver Meng Rui (Participant Author), Winnie Siu Ching Leung (Participant Author), Oliver Zhen Li (Participant Author)

Research output: Contribution to journalJournal

96 Citations (Web of Science)

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.
Original languageEnglish
Pages (from-to)675-698
JournalJournal of Financial Economics
Volume108
Issue number3
DOIs
Publication statusPublished - 2013

Corresponding author email

bizzhenl@nus.edu.sg

Keywords

  • Labor unions
  • tax aggressiveness

Indexed by

  • FT
  • ABDC-A*
  • Scopus
  • SSCI

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