When corporations based in areas of above-average income inequality pay more taxes, it’s not just the public that appreciates it – investors do, too. That’s the key finding of our recent research published in the journal Accounting and the Public Interest.
Our finding challenges traditional economic theory holding that investors see corporate taxes as a transfer of wealth from shareholders to the state. That would suggest investors value only strategies that minimize taxes. The reality isn’t so simple.
As accounting professors at the University of Dayton, we study the intersection of corporate taxes and corporate social responsibility. We wanted to better understand how corporate taxes affect firm value and stock prices, and whether that relationship changes if a company is headquartered in an area with high income inequality.
