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Full-Text Articles in Finance and Financial Management
The Impact Of Stakeholder Orientation On Tax Avoidance: Evidence From A Natural Experiment, Gary Chen, Ani Manakyan Mathers, Bin Wang, Xiaohong Wang
The Impact Of Stakeholder Orientation On Tax Avoidance: Evidence From A Natural Experiment, Gary Chen, Ani Manakyan Mathers, Bin Wang, Xiaohong Wang
Finance Faculty Research and Publications
We study the effect of stakeholder orientation on corporate tax avoidance. Using the staggered passage of constituency statutes across U.S. states between 1983 and 2006, we show that greater stakeholder orientation results in increased tax avoidance. We further find greater tax avoidance among firms with limited financial resources and that employees benefit from the change. Our results are consistent with stakeholder salience theory that resource-constrained managers prioritize the claims of salient stakeholders, such as employees, at the expense of secondary stakeholders, such as the government.
Litigation Risk Management Through Corporate Payout Policy, Matteo Arena, Brandon Julio
Litigation Risk Management Through Corporate Payout Policy, Matteo Arena, Brandon Julio
Finance Faculty Research and Publications
Firms modify their payout policy in anticipation of future litigation costs. We examine a comprehensive sample of U.S. corporate lawsuits and find that firms facing significant litigation risk pay lower dividends, and in some cases omit dividends while distributing more cash through share repurchases. Litigation risk changes the distribution of payouts but not the total payout yield as the increase in share repurchases offsets the decrease in dividends. Cash-poor firms cut share repurchases when settlement costs are incurred. The results suggest that firms at a higher risk of litigation increase their payout flexibility.