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.
Similar content being viewed by others
Notes
Examples of these varying relationships between the German and U.S. systems noted by Hall and Soskice (2001) include the following. The U.S. liberal market model has largely deregulated labor markets while the German model has a stronger industrial-relations system. Standard setting in the U.S. model is conducted via market competition, while the German model allows for standard setting through cooperative intercompany relationships. German firms have more ability to finance through non-publicly available information than those in U.S. markets.
These results are based on Wave 6 (2010–2014) of the World Value Survey. Official aggregate v.20150418. World Values Survey Association (www.worldvaluessurvey.org). Aggregate File Producer: Asep/JDS, Madrid SPAIN.
Another benefit of using pens is that they are a neutral product. Other fast-moving consumer goods that are relevant to a student sample such as coffee, chocolate, and other food products as well as paper are often associated with social (e.g., fair trade) or environmental (e.g., deforestation) issues that could impact the subjects’ CSR perception outside of the CTS manipulation.
U.S. participants were recruited from introductory financial and managerial accounting courses. German participants were recruited through a volunteer list assembled from introductory courses, participants from other experiments, or from a notice on the university’s homepage seeking volunteers.
U.S. participants received additional course credit for their participation. The German examination regulations did not allow us to offer course credit.
In our later analysis, we control for demographic differences between the countries.
Our use of the term tax avoidance mirrors its use in the popular press to describe activities that corporations use to lower their taxes, but that do not rise to the level of tax evasion. We use the term consistently in all four of our experimental conditions. Both the American and European press use the term as can be seen, for instance, in articles from the BBC and the NY Times (https://www.bbc.com/news/magazine-20560359 and https://www.nytimes.com/interactive/2017/11/10/opinion/gabriel-zucman-paradise-papers-tax-evasion.html). To the extent that the term may carry negative connotations for consumers beyond the underlying tax-reducing activities, it may influence participant responses.
According to Williams (2007), motives for engaging in CSR can be “good”, i.e., altruistic or “selfish”, i.e., carried out in expectations of benefits to the firm. Firms may even hold dual motives simultaneously (Lanis and Richardson 2015). For this study, we are interested in assessing CTS as a form of CSR from the consumers’ perspective. No indication within the experimental materials indicates the firm’s motivation.
Two researchers independently translated the articles. Differences were discussed and agreed on by the two researchers.
Supplies, Inc., was the name for the U.S. firm and Office AG was the name for the German firm. The term AG is the German abbreviation for incorporation. For both sets of subjects, the home country is used as the headquarters in order to avoid introducing potential confounds on a subject’s perceptions related to foreign ownership and/or corporate inversions.
Pilot testing indicated that using an unrelated example deepened the subject’s understanding of the BDM mechanism.
Due to the different laboratory facilities available, we used paper questionnaires in the United States and computerized questionnaires in Germany. All procedural steps were identical. This difference in laboratory facilities is not a drawback to our study. In a meta-analysis, Richman et al. (1999) show that using a computer-assisted questionnaire has no consistent effect on social desirability bias compared to paper questionnaires. The authors suggest that for practical decision-making in multiple testing situations, computer and paper-and-pencil scales should provide similar mean results. In addition, we use an incentive-compatible design, which further reduces the likelihood of a potential social desirability bias.
To correct for exchange rate differentials and unequal variance, we divide WTP by the control condition’s mean WTP for both countries, separately.
Specifically, we excluded all observations that showed a serious misunderstanding of the tax manipulation check questions. A misunderstanding was assumed if participants chose the opposite side of the correct answer on the Likert scales or if the participant chose the second most opposite answer on two check measures. We also deleted observations that simultaneously found the BDM procedure confusing and did not understand why it is in their best interest to state exactly the price they are willing to pay.
Specifically, we eliminated the first observations collected for the respective conditions. As a robustness test, we estimated our model with the sample before that exclusion of 15 observations (n = 424) and find similar results (“Appendix 4”).
Ringle et al. (2015).
The mediating effect holds when we include the exogenous variable attractiveness of the pen (attractiveness → WTP) to control for potential differences in perceived attractiveness.
Five out of 409 participants recorded a WTP of zero, which could be interpreted as a zero interest to buy the product. To ensure a lack of product interest by some participants does not bias our results, we estimate our model with only those observations that have a positive WTP and find similar results.
Note: German participants were informed that the firm had a German headquarters.
References
Adams, J. (1965). Inequity in social exchange. In L. Berkowitz (Ed.), Advances in experimental social psychology (pp. 267–299). New York: Academic Press.
Aguinis, H., Beaty, J. C., Boik, R. J., & Pierce, C. A. (2005). Effect size and power in assessing moderating effects of categorical variables using multiple regression: A 30-year review. The Journal of Applied Psychology, 90(1), 94–107.
Antonetti, P., & Anesa, M. (2017). Consumer reactions to corporate tax strategies. The role of political ideology. Journal of Business Research, 74, 1–10.
Asay, H. S., Hoopes, J. L., Thornock, J. R., and Wilde, J. H. (2018). Consumer responses to corporate tax planning. Working Paper, University of Iowa.
Austin, C. R., & Wilson, R. J. (2017). An examination of reputational costs and tax avoidance: Evidence from firms with valuable consumer brands. The Journal of the American Taxation Association, 39(1), 67–93.
Avi-Yonah, R. S. (2005). The cyclical transformations of the corporate form: A historical perspective on corporate social responsibility. Delaware Journal of Corporate Law, 30, 767–818.
Avi-Yonah, R. S. (2014). Corporate taxation and corporate social responsibility. New York University Journal of Law & Business, 11, 1–29.
Bagozzi, R. P., & Yi, Y. (1988). On the evaluation of structural equation models. Journal of the Academy of Marketing Science, 16(1), 74–94.
Barclay, D., Higgins, C., & Thompson, R. (1995). The partial least squares (PLS) approach to casual modeling: Personal computer adoption and use as an illustration. Technological Studies, 2(2), 285–309.
Becker, G. M., Degroot, M. H., & Marschak, J. (1964). Measuring utility by a single-response sequential method. Systems Research and Behavioral Science, 9(3), 226–232.
Boush, D. M., & Loken, B. (1991). A process-tracing study of brand extension evaluation. Journal of Marketing Research, 28(1), 16–28.
Brown, T. J., & Dacin, P. A. (1997). The company and the product Corporate associations and consumer product responses. Journal of Marketing, 61(1), 68–84.
Calder, B. J., Phillips, L. W., & Tybout, A. M. (1981). Designing research for application. Journal of Consumer Research, 8(2), 197–207.
Campbell, J. L. (2006). Institutional analysis and the paradox of corporate social responsibility. American Behavioral Scientist, 49(7), 925–938.
Carroll, A. B. (1979). A three-dimensional conceptual model of corporate performance. Academy of Management Review, 4(4), 497–505.
Carroll, A. B. (1991). The pyramid of corporate social responsibility: Toward the moral management of organizational stakeholders. Business Horizons, 34, 39–48.
Chen, S., & Bouvain, P. (2009). Is corporate responsibility converging? A comparison of corporate responsibility reporting in the USA, UK, Australia, and Germany. Journal of Business Ethics, 87(1), 299–317.
Chernev, A., & Blair, S. (2015). Doing well by doing good. The benevolent halo of corporate social responsibility. Journal of Consumer Research, 41(6), 1412–1425.
Chin, W. W. (1998). The partial least squares approach to structural equation modeling. In George A. Marcoulides (Ed.), Modern methods for business research, (295–336). Mahwah, NJ: Lawrence Erlbaum Associates.
Christensen, J., & Murphy, R. (2004). The social irresponsibility of corporate tax avoidance: Taking CSR to the bottom line. Development, 47(3), 37–44.
Cohen, J. (1988). Statistical power analysis for the behavioral sciences. Hillsdale, NJ: Lawrence Earlbaum Associates.
Davis, A. K., Guenther, D. A., Krull, L. K., & Williams, B. M. (2016). Do socially responsible firms pay more taxes? The Accounting Review, 91(1), 47–68.
Dijkstra, T. K., & Henseler, J. (2015). Consistent and asymptotically normal PLS estimators for linear structural equations. Computational Statistics & Data Analysis, 81, 10–23.
Dowling, G. R. (2014). The curious case of corporate tax avoidance. Is it socially irresponsible? Journal of Business Ethics, 124(1), 173–184.
Dyck, A., Morse, A., & Zingales, L. (2010). Who blows the whistle on corporate fraud? The Journal of Finance, 65(6), 2213–2253.
Dyreng, S. D., Hanlon, M., & Maydew, E. L. (2008). Long-run corporate tax avoidance. The Accounting Review, 83(1), 61–82.
Dyreng, S. D., Hanlon, M., & Maydew, E. L. (2019). When does tax avoidance result in tax uncertainty? The Accounting Review, 94(2), 179–203.
Dyreng, S. D., Hoopes, J. L., & Wilde, J. H. (2016). Public pressure and corporate tax behavior. Journal of Accounting Research, 54(1), 147–186.
Fombrun, C. J., Gardberg, N. A., & Sever, J. W. (2000). The reputation quotient: A multi-stakeholder measure of corporate reputation. The Journal of Brand Management, 7(4), 241–255.
Fornell, C., & Larcker, D. F. (1981). Structural equation models with unobservable variables and measurement error. Algebra and Statistics. Journal of Marketing Research, 18(3), 382–388.
Friedman, M. (1970). The social responsibility of business is to increase profits. New York Times Magazine, 9(13/1970), 32–33.
Gallemore, J., Maydew, E. L., & Thornock, J. R. (2014). The reputational costs of tax avoidance. Contemporary Accounting Research, 31(4), 1103–1133.
Geisser, S. (1974). A predictive approach to the random effect model. Biometrika, 61(1), 101–107.
Gindis, D. (2009). From fictions and aggregates to real entities in the theory of the firm. Journal of Institutional Economics, 5(1), 25–46.
Godfrey, P. C., Merrill, C. B., & Hansen, J. M. (2009). The relationship between corporate social responsibility and shareholder value: An empirical test of the risk management hypothesis. Strategic Management Journal, 30(4), 425–445.
Graham, J. R., Hanlon, M., Shevlin, T., & Shroff, N. (2014). Incentives for tax planning and avoidance. Evidence from the field. The Accounting Review, 89(3), 991–1023.
Green, T., & Peloza, J. (2011). How does corporate social responsibility create value for consumers? Journal of Consumer Marketing, 28(1), 48–56.
Hair, J. F., Ringle, C. M., & Sarstedt, M. (2011). PLS-SEM. Indeed a silver bullet. Journal of Marketing Theory and Practice, 19(2), 139–152.
Hair, J. F., Sarstedt, M., Ringle, C. M., & Mena, J. A. (2012). An assessment of the use of partial least squares structural equation modeling in marketing research. Journal of the Academy of Marketing Science, 40(3), 414–433.
Hall, P., & Soskice, D. (2001). An introduction to varieties of capitalism. In P. Hall & D. Soskice (Eds.), Varieties of capitalism: The institutional foundations of comparative advantage (pp. 1–68). Oxford: Oxford University Press.
Hanlon, M., & Heitzman, S. (2010). A review of tax research. Journal of Accounting and Economics, 50(2–3), 127–178.
Hanlon, M., & Slemrod, J. (2009). What does tax aggressiveness signal? Evidence from stock price reactions to news about tax shelter involvement. Journal of Public Economics, 93(1–2), 126–141.
Hardeck, I., & Hertl, R. (2014). Consumer reactions to corporate tax strategies. Effects on corporate reputation and purchasing behavior. Journal of Business Ethics, 123(2), 309–326.
Hardeck, I., & Kirn, T. (2016). Taboo or technical issue? An empirical assessment of taxation in sustainability reports. Journal of Cleaner Production, 133, 1337–1351.
Harris, R. (2006). The transplantation of the legal discourse on corporate personality theories: From German codification to British political pluralism and American big business. Washington and Lee Law Review, 63(4), 1421–1478.
Hillenbrand, C., Money, K. G., Brooks, C., & Tovstiga, N. (2017). Corporate tax: What do stakeholders expect? Journal of Business Ethics forthcoming. https://doi.org/10.1007/s10551-017-3700-6.
Hoi, C. K., Wu, Q., & Zhang, H. (2013). Is corporate social responsibility (CSR) associated with tax avoidance? Evidence from irresponsible CSR activities. The Accounting Review, 88(6), 2025–2059.
Homer, P. M. (1995). Ad size as an indicator of perceived advertising costs and effort. The effects on memory and perceptions. Journal of Advertising, 24(4), 1–12.
Hulland, J. (1999). Use of partial least squares (PLS) in strategic management research: A review of four recent studies. Strategic Management Journal, 20(2), 195–204.
Jemiolo, S. V. (2018). The impact of corporate tax aggressiveness on CSR perceptions. Working Paper, University of Oklahoma.
Kenny, D. A. (2015). Moderation. http://davidakenny.net/cm/moderation.htm#WDNS.
Khera, I. P., & Benson, J. D. (1970). Are students really poor substitutes for businessmen in behavioral research? Journal of Marketing Research, 7(4), 529–532.
Lan, L. L., & Heracleous, L. (2010). Rethinking agency theory: The view from law. Academy of Management Review, 35(2), 294–314.
Lanis, R., & Richardson, G. (2015). Is corporate social responsibility performance associated with tax avoidance? Journal of Business Ethics, 127(2), 439–457.
Lee, L., Petter, S., Fayard, D., & Robinson, S. (2011). On the use of partial least squares path modeling in accounting research. International Journal of Accounting Information Systems, 12(4), 305–328.
Luo, X., & Bhattacharya, C. B. (2006). Corporate social responsibility, customer satisfaction, and market value. Journal of Marketing, 70(October), 1–18.
MacKinnon, D. P. (2008). Introduction to statistical mediation analysis. New York: Lawrence Erlbaum Associates.
Maignan, I. (2001). Consumers’ perceptions of corporate social responsibilities: A cross-cultural comparison. Journal of Business Ethics, 30(1), 57–72.
McGee, R. W. (2010). Ethical issues in transfer pricing. Manchester Journal of International Economic Law, 7(2), 24–41.
McWilliams, A., & Siegel, D. (2001). Corporate social responsibility: A theory of the firm perspective. Academy of Management Review, 26(1), 117–127.
Miller, G. S. (2006). The press as a watchdog for accounting fraud. Journal of Accounting Research, 44(5), 1001–1033.
Miller, K. M., Hofstetter, R., Krohmer, H., & Zhang, Z. J. (2011). How should consumers’ willingness to pay be measured? An empirical comparison of state-of-the-art approaches. Journal of Marketing Research, 48(1), 172–184.
Öberseder, M., Schlegelmilch, B. B., & Gruber, V. (2011). Why don’t consumers care about CSR? A qualitative study exploring the role of CSR in consumption decisions. Journal of Business Ethics, 104(4), 449–460.
Payne, D. M., & Raiborn, C. A. (2018). Aggressive tax avoidance A conundrum for stakeholders, governments, and morality. Journal of Business Ethics, 147(3), 469–487.
Peloza, J., & Shang, J. (2011). How can corporate social responsibility activities create value for stakeholders? A systematic review. Journal of the Academy of Marketing Science, 39(1), 117–135.
Petrin, M. (2013). Reconceptualizing the theory of the firm—from nature to function. Penn State Law Review, 118(1), 1–53.
Phillips, M. J. (1994). Reappraising the realentity theory of the corporation. Florida State University Law Review, 21(4), 1061–1123.
Porter, M. E., & Kramer, M. R. (2006). Strategy & society: The link between competitive advantage and corporate social responsibility. Harvard Business Review, 84(12), 78–92.
Reimer, M., van Doorn, S., & Heyden, M. L. M. (2018). Unpacking functional experience complementarities in senior leaders’ influences on CSR strategy: A CEO–top management team approach. Journal of Business Ethics, 151(4), 977–995.
Richman, W. L., Kiesler, S., Weisband, S., & Drasgow, F. (1999). A meta-analytic study of social desirability distortion in computer-administered questionnaires, traditional questionnaires, and interviews. Journal of Applied Psychology, 84(5), 754–775.
Ringle, C. M., Wende, S., and Becker, J.M. (2015). “SmartPLS 3.” Boenningstedt: SmartPLS GmbH. http://www.smartpls.com.
Sen, S., & Bhattacharya, C. B. (2001). Does doing good always lead to doing better? Consumer reactions to corporate social responsibility. Journal of Marketing Research, 38(2), 225–243.
Servaes, H., & Tamayo, A. (2013). The impact of corporate social responsibility on firm value: The role of customer awareness. Management Science, 59(5), 1045–1061.
Shafer, W. E., & Simmons, R. S. (2008). Social responsibility, Machiavellianism and tax avoidance. Accounting, Auditing & Accountability Journal, 21(5), 695–720.
Stone, M. (1974). Cross-validatory choice and assessment of statistical predictions. Journal of the Royal Statistical Society, 36(2), 111–147.
Thaler, R. (1985). Mental accounting and consumer choice. Marketing Science, 4(3), 199–214.
van Doorn, J., & Verhoef, P. C. (2011). Willingness to pay for organic products. Differences between virtue and vice foods. International Journal of Research in Marketing, 28(3), 167–180.
Vitell, S. J. (2015). A case for consumer social responsibility (CnSR). Including a selected review of consumer ethics/social responsibility research. Journal of Business Ethics, 130(4), 767–774.
Wagner, T., Lutz, R. J., & Weitz, B. A. (2009). Corporate hypocrisy. Overcoming the threat of inconsistent corporate social responsibility perceptions. Journal of Marketing, 73(6), 77–91.
Walsh, G., & Beatty, S. E. (2007). Customer-based corporate reputation of a service firm: Scale development and validation. Journal of the Academy of Marketing Science, 35(1), 127–143.
Walster, E., Walster, G., & Berscheid, E. (1978). Equity theory and research. Boston: Allyn and Bacon Inc.
Watson, L. (2015). Corporate social responsibility, tax avoidance, and earnings performance. Journal of the American Taxation Association, 37(2), 1–21.
Wertenbroch, K., & Skiera, B. (2002). Measuring consumers’ willingness to pay at the point of purchase. Journal of Marketing Research, 39(2), 228–241.
Williams, D. F. (2007). Developing the concept of tax governance. London: KPMG.
Acknowledgements
The authors appreciate the helpful comments of Harald Amberger (discussant), Mary Marshall (discussant), James Lawson (discussant), Florian Dost, Ayalew Lulseged, Laureen Maines, Lasse Mertins, Tim Rupert, and participants at the 8th and 10th Annual Behavioral Tax Symposiums at George Mason University, the 8th EIASM Conference on “Current Research in Taxation”, the 5th Annual MaTax Conference, the 2018 ABO Section Research Conference, and the 2019 ATA Midyear Meeting at different stages of this research. In addition, the authors would like to thank Lisa Noerenberg and Maggie Shaffer for their research assistance. Financial assistance by Viadrina Center B/ORDERS IN MOTION and the UNCG Department of Accounting and Finance is gratefully acknowledged.
Author information
Authors and Affiliations
Corresponding author
Ethics declarations
Ethical Approval
All procedures performed in studies involving human participants were in accordance with the ethical standards of the institutional and/or national research committee and with the 1964 Helsinki declaration and its later amendments or comparable ethical standards.
Informed Consent
Informed consent was obtained from all individual participants included in the study.
Additional information
Publisher's Note
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
Appendices
Appendix 1
Stimuli
General Company Information
Supplies, Inc., is one of the industry’s leading providers of office and school supplies. The USFootnote 20-headquartered company designs, manufactures and distributes multiple lines of writing instruments, binders, notebooks, calendars, desktop containers and countless other school and office products.
Information About Tax Strategies
Some companies use tax avoidance strategies to lower their tax payments. Tax avoidance strategies are activities designed solely to reduce taxes and they often lack any other economic purpose. Although these strategies are designed to be strictly legal, they may contradict the intent of the law. For example, one strategy would be to shift profits from one corporation to a related business unit that is taxed at a lower rate, which reduces total tax payments of the group.
While some forms of tax avoidance are acceptable to tax authorities, uncertainty surrounds the use of other forms of tax avoidance. In some cases, tax authorities can reject tax avoidance strategies that they deem to be ‘abusive’ strategies. For example, tax authorities may reject a tax avoidance strategy if the strategy is deemed not to have any economic purpose other than the reduction of taxes and the reduction of taxes was unintended by the law. If the tax authorities reject a tax avoidance strategy, then any avoided taxes and potential penalties will be imposed on the taxpayer.
Company Specific Information About Tax Strategies
CONTROL | NON_AVOID | LOW_AVOID | HIGH_AVOID |
---|---|---|---|
Supplies, Inc., claims all the usual deductions for a firm in its industry, beyond that, it does not follow a specific tax strategy | Supplies, Inc., claims all the usual deductions for a firm in its industry, but it does not use tax avoidance strategies to further lower its tax payments | Supplies, Inc., claims all the usual deductions for a firm in its industry, and, in addition, it also uses tax avoidance strategies to further lower its tax payments | Supplies, Inc., claims all the usual deductions for a firm in its industry, and, in addition, it also uses tax avoidance strategies to further lower its tax payments |
Supplies, Inc., pays taxes at the median effective tax rate for firms in this industry. This means that about 50% of the firms in the industry pay more and 50% pay less taxes than Supplies, Inc. The effective tax rate is taxes paid as a percentage of total income | Supplies, Inc., pays taxes at the average effective tax rate for firms in this industry that do not engage in tax avoidance strategies. This means Supplies, Inc., pays higher taxes than other firms in the industry that do engage in tax avoidance strategies. The effective tax rate is taxes paid as a percentage of total income | Supplies, Inc., pays taxes at an effective tax rate that is in the lowest third of rates for firms in this industry. This means Supplies, Inc., pays lower taxes than other firms in the industry that do not engage in tax avoidance strategies. The effective tax rate is taxes paid as a percentage of total income | Supplies, Inc., pays taxes at an effective tax rate that is in the lowest third of rates for firms in this industry. This means Supplies, Inc., pays lower taxes than other firms in the industry that do not engage in tax avoidance strategies. The effective tax rate is taxes paid as a percentage of total income |
Supplies, Inc., provides no additional description of its tax strategies in its audited financial statements | Supplies, Inc., states in its audited financial statements that it does not use any tax avoidance strategies | Supplies, Inc., gives assurance in its audited financial statements that all tax avoidance strategies it uses are acceptable to the tax authorities. Therefore, Supplies, Inc., is certain that its tax avoidance strategies will be allowed | Supplies, Inc., cautions in its audited financial statements that some tax avoidance strategies it uses may be rejected by the tax authorities. Therefore, Supplies, Inc., is uncertain if all its tax avoidance strategies will be allowed |
Appendix 2
BDM Explanation
You now have the opportunity to buy the pen labeled ‘2’. You will not have to spend any more for the pen than you really want to. I’d like to know how much money you are willing to spend for this pen today. Think about the highest price you would be willing to pay for the pen labeled ‘2’.
Near the end of the session today one of you will draw a ball from this bin. The balls are labeled with different prices.
If the price on the ball drawn from the bin is less than or equal to the price you write down, then you will have to buy the pen for the price drawn from the bin. If the price drawn is greater than the price you write down, then you will not be able to buy the pen.
Example to illustrate the decision
-
Your price: $102 Draw: $100 Sale, at $100
-
Your price: $98 Draw: $100 No Sale
This procedure ensures that it is best for you to truthfully reveal the maximum price you are willing to pay. If you tell me a price that is higher, then you may actually have to pay that higher price. If you tell me a price that is lower, then you may be disappointed if you can’t buy the product. This would happen if we draw a price that is higher than the price you tell me but lower than your “true” price.
Note that you cannot influence the purchase price with the price you tell me. Because the purchase price is drawn from the bin, it is completely random and independent of whatever you tell me. Do you have any questions?
Now, decide on the maximum amount you are willing to pay for this pen. If we draw a price from the bin that is less than or equal to the price you just recorded, then we will sell you the pen at the price we draw from the bin. However, if we draw a price that exceeds the one you just stated, then we will not sell you the pen.
Appendix 3
Measures
Variables | Items | Source |
---|---|---|
Exogenous constructs | ||
LOW_AVOID | Dummy variable, coded one if participants were part of the low avoidance condition, and zero otherwise | – |
HIGH_AVOID | Dummy variable, coded one if participants were part of the high avoidance condition, and zero otherwise | – |
NON_AVOID | Dummy variable, coded one if participants were part of the non-avoidance condition, and zero otherwise | – |
CONTROL | Dummy variable, coded one if participants were part of the control condition, and zero otherwise. The control condition serves as reference group for LOW_AVOID, HIGH_AVOID, and NON_AVOID | – |
COUNTRY | Dummy variable, coded one for German participants and zero for U.S. participants | – |
Endogenous constructs | ||
CSR_PERC | In my opinion, company …a • is a socially responsible company • is concerned with improving the wellbeing of society • follows high ethical standards | Wagner et al. (2009) |
ATT | In general, my feelings toward company are …b • unfavorable/favorable • bad/good • unpleasant/pleasant • positive/negative | |
WTP | Which amount would you be willing to pay in order to receive the pen? | Wertenbroch and Skiera (2002) |
Manipulation check and control variables | ||
MC_BDM1 | Has this procedure been confusing for you?c | Wertenbroch and Skiera (2002) |
MC_BDM2 | Is it clear why it is in your best interest to state exactly the price you are willing to pay?c | Wertenbroch and Skiera (2002) |
MC_TAX1 | Supplies, Inc. pursues activities solely to reduce taxesa | – |
MC_TAX2 | Supplies, Inc. uses tax avoidance strategies that could be rejected by tax authoritiesa | – |
MC_TAX3 | How is Supplies, Inc.’ effective tax rate compared to other firms in the industry?d | – |
ATTRACT | How attractive was the new pen?e | Wertenbroch and Skiera (2002) |
Appendix 4
Hypotheses Testing with 424 Observations
Notes: This figure shows path coefficients and p-values for the inner model. We applied consistent bootstrapping with 5000 replications. Significance levels are based on two-tailed t-tests. *, **, *** Indicate statistical significance at the 0.1, 0.05, and 0.01 levels, respectively. The control condition (CONTROL) serves as reference group for the low tax avoidance (LOW_AVOID), the high tax avoidance (HIGH_AVOID) as well as the non-avoidance (NON_AVOID) condition. COUNTRY is coded 0 for the United States and 1 for Germany.
Rights and permissions
About this article
Cite this article
Hardeck, I., Harden, J.W. & Upton, D.R. Consumer Reactions to Tax Avoidance: Evidence from the United States and Germany. J Bus Ethics 170, 75–96 (2021). https://doi.org/10.1007/s10551-019-04292-8
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10551-019-04292-8