Corporate tax strategy and recruitment success

Kurzfassung/Abstract

This study examines empirically how a company’s corporate tax strategy (CTS) impacts its recruitment success. Applying a factorial survey experiment, we show that applicants (i.) regard companies that evade or aggressively avoid taxation as significantly less desirable employers and (ii.) are significantly less likely to accept a job offer from employers who employ such strategies. Our analysis indicates that the fairness of the corporate tax system, applicants’ tax morale and their personal attitude toward tax avoidance moderate the main effect of a CTS on recruitment success. These findings suggest that a company’s CTS serves as a signal to applicants, who anticipate the potential impact of a company’s CTS on their self-concept when considering that company as a possible employer. Our results are highly relevant to researchers and practitioners who need to assess the non-tax costs that the recruitment process carries as a result of specific CTSs and shed light on how applicants make judgments about potential employers.