Abstract
Studies suggest that when a language requires grammatical marking of future events, speakers prefer immediate payoffs and engage in less future-oriented behavior. If future costs of tax avoidance are non-trivial, we posit that strong future time reference (FTR) in languages would lower managers’ perceptions about costs, encouraging more tax avoidance. Using a large sample of 56,243 firm-year observations across 31 countries, we find that tax avoidance is higher where FTR in the language is strong. We also find that tax avoidance is more prevalent in Swiss regions with strong FTR and in US firms whose CEOs were born in countries with strong FTR. Collectively, our evidence suggests that costs of tax avoidance can be non-trivial, and that linguistically driven time perception helps explain the cross-country variation in tax avoidance.
| Original language | English |
|---|---|
| Pages (from-to) | 625-650 |
| Number of pages | 26 |
| Journal | Journal of Business Ethics |
| Volume | 180 |
| Issue number | 2 |
| DOIs | |
| Publication status | Published - 2022 Oct |
Bibliographical note
Funding Information:We appreciate the comments and suggestions of Steven Dellaportas (Section Editor) and three anonymous referees. We also thank Shirley Daniel and Sangsoo Park and the workshop participants at George Washington University, HEC-Lausanne, Paris-Dauphine University, and Queen’s University for their constructive comments, and Chieh-Chieh Hsieh, Sehee Kim, Hayoon Lee, Mike Weng and Jingwen Zhao for their excellent research assistance. We would also like to thank Michael Drake for generously sharing tax data. C.S. Agnes Cheng gratefully acknowledges research funding from The Hong Kong Polytechnic University. Jaehyeon Kim acknowledges research funding from Ajou University. Mooweon Rhee appreciates research funding from the Yonsei School of Business. This work was also supported by the 'BK21 FOUR (Fostering Outstanding Universities for Research)' in 2021, which has been provided to Mooweon Rhee. Jian Zhou gratefully acknowledges research support from the Lloyd Fujie/Deloitte Foundation Distinguished Professorship and the Shidler College of Business at University of Hawaii at Manoa.
Funding Information:
We appreciate the comments and suggestions of Steven Dellaportas (Section Editor) and three anonymous referees. We also thank Shirley Daniel and Sangsoo Park and the workshop participants at George Washington University, HEC-Lausanne, Paris-Dauphine University, and Queen’s University for their constructive comments, and Chieh-Chieh Hsieh, Sehee Kim, Hayoon Lee, Mike Weng and Jingwen Zhao for their excellent research assistance. We would also like to thank Michael Drake for generously sharing tax data. C.S. Agnes Cheng gratefully acknowledges research funding from The Hong Kong Polytechnic University. Jaehyeon Kim acknowledges research funding from Ajou University. Mooweon Rhee appreciates research funding from the Yonsei School of Business. This work was also supported by the 'BK21 FOUR (Fostering Outstanding Universities for Research)' in 2021, which has been provided to Mooweon Rhee. Jian Zhou gratefully acknowledges research support from the Lloyd Fujie/Deloitte Foundation Distinguished Professorship and the Shidler College of Business at University of Hawaii at Manoa.
Publisher Copyright:
© 2021, The Author(s), under exclusive licence to Springer Nature B.V.
All Science Journal Classification (ASJC) codes
- Business and International Management
- Business, Management and Accounting(all)
- Arts and Humanities (miscellaneous)
- Economics and Econometrics
- Law