This study contributes to research on how stakeholders react to corporate tax strategies (CTSs). In two experiments we show that consumers are more likely to react negatively to 'aggressive' rather than to reward 'conservative' CTSs. The impact of CTSs on consumer reactions is mediated by the perceived ethicality of the firm and moderated by individuals' political identification. Right-leaning consumers are less likely than left-leaning consumers to punish companies engaging in tax avoidance. This moderation depends on the personal connection customers have with a particular brand: both left-leaning and right-leaning consumers punish firms they feel close to when such firms engage in aggressive CTSs. The study extends our understanding of the benefits and risks associated with different CTSs. It contributes to debates on the morality of CTSs, showing that political ideology shapes individuals' perceived ethicality of corporations engaged in aggressive tax avoidance.
The presence of conflicting cues about what is legitimate provided by various stakeholders, begs the question of how the legitimacy of contested institutionalized practices is justified. Recent critique of tax minimization strategies exemplifies this difficulty: on one hand, practitioners need to increase shareholders' profits; on the other, a growing number of stakeholders push for ‘fairer’ corporate tax payments. Conducted during a time of public criticism of Australian corporate tax strategies, our study draws on justifications of corporate tax minimization strategies by senior tax practitioners and corporate submissions to a Senate Inquiry on corporate tax avoidance. The study explores how legitimacy judgements come under pressure by conflicting cues. Through the application of Boltanski and Thévenot's (2006) Economies of Worth (EW) framework, we advance legitimacy scholarship by clarifying what constitutes situated judgements in times of instability. Our work puts forward the concept of perceived forecasted consensus as a guide for individuals in making situated legitimacy judgements in times of instability.
This essay extends a Bourdieusian perspective on the microfoundations of institutions.Drawing on this perspective, we argue that the recursive dynamics of institutions and action orient actors towards the maintenance of distinct and contradictory practices within, rather than bridging across, different fields. We corroborate our argument with an illustration of how corporate executives strategize within the tax field compared to the philanthropy field.Specifically, we show how actors are simultaneously oriented by different capitals towards apparently contradictory strategies. Our essay provides promising avenues for future research on the microfoundations of institutions, inter-field dynamics, and critical accounting and business ethics studies.
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