The Effects of Tax Avoidance News on Employee Perceptions of Managers and Firms: Evidence from Glassdoor.com Ratings

• DOI: 10.2139/ssrn.3671004
• Publication Date: 2020-09-26T11:32:06Z
• Authors: Yoojin Lee; Shaphan Ng; Terry J. Shevlin; Aruhn Venkat
• Keywords: Auditing and Accountability; Management and Organisational Behaviour; 330; auditing and accountability; 05 social sciences; Commerce; Strategy; reputation; Glassdoor; 650; Glassdoor ratings; Banking; Management; employee ratings; finance and investment; Tax avoidance news; Accounting; 0502 economics and business; tax avoidance news; Finance and Investment; Human Resources Management; Tourism and Services

ABSTRACT We examine whether employee perceptions of managers and firms fall following tax avoidance news. Using S&P 500 firms and generalized difference-in-differences specifications, we find that tax avoidance news negatively affects employee perceptions of managers and firms. In cross-sectional tests, we find that (1) firms and managers in consumer-facing industries suffer larger employee-related perception changes from tax avoidance news compared to other firms, and (2) well-performing firms and their managers face smaller perception changes than other firms and managers. Overall, our results are consistent with tax avoidance news negatively affecting employee perceptions of managers and firms.