Media attention and tax avoidance: Evidence from Korea

초록

This study investigates how companies listed in the Korean stock market change their tax avoidance as a response to media attention. We find that firms with more media attention increases their GAAP and cash effective tax rates, meaning less tax avoidance. We also find that this result is stronger for larger firms, older firms, and firms affiliated with business group, while we do not find the significant variations across product market leadership and competition. We interpret these findings that firms respond to media attention by paying more taxes to recover the reputational damage from the detection of aggressive tax planning.