Non-market factors influencing corporate behaviour in the context of tax avoidance

This thesis analyses four nonmarket factors, namely corruption, secrecy, Environmental, social and governance (ESG) performance, and media, which may influence the behaviour of multinational firms in the context of tax avoidance. Each provides a unique lens through which the interaction of multinational firms with the institutions, the laws, and the societies in which they operate is considered. The role which corruption perceptions and secrecy in the business environment play in shaping profit shifting behaviour of multinational firms is examined using country-level data. The findings show a significant and positive impact of corruption perceptions and secrecy on profit shifting and are consistent with theoretical models that predict that corruption may facilitate tax avoidance. The relationship between corporate tax avoidance and ESG performance is considered using a firm-level analysis of the Financial Times Stock Exchange 100 (FTSE 100) and FTSE 250 firms. The results show that the higher the level of ESG performance of a firm, the lower the likelihood of tax avoidance. Finally, the role that the media plays in publicising tax avoidance by companies is examined for the FTSE 100 firms. The findings show that negative media tax coverage does not appear to significantly improve their ESG performance