Does Social Media Deter Corporate Tax Avoidance
Dr. Susan Z. Shu
Associate Professor in Accounting
Carroll School of Management
Boston College
We examine whether social media exposure curbs aggressive corporate tax planning. The unprecedented reach, speed, and network features of social media facilitate the spread of potentially negative coverage of tax avoidance practices, which may impose political and reputational costs on tax-aggressive firms. Employing Twitter usage at the county level to proxy for social media exposure, we find that firms in counties with high tweet intensity engage in less aggressive corporate tax planning. Cross-sectionally, the deterrence effect is heightened among firms in heavily subsidized industries, firms with greater political risks, and those in areas with high unemployment, consistent with the political cost channel of social media influence. Overall, our findings suggest that social media exposure plays a role in curbing aggressive corporate tax avoidance.