alexa Is Business Ethics the ‘Last Rampart’ Against Tax Aggressiveness?
ISSN: 2472-114X

International Journal of Accounting Research
Open Access

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Research Article

Is Business Ethics the ‘Last Rampart’ Against Tax Aggressiveness?

Wegener M1* and Labelle R2

1University of New Brunswick Saint John, Faculty of Business, 100 Tucker Park Road, Saint John, New Brunswick, E2L 4L5, Canada

2HEC Montréal, Department of Accounting Studies, 3000, Chemin de la Côte-Sainte-Catherine, Montréal, Québec, H3T 2A7, Canada

*Corresponding Author:
Wegener M
University of New Brunswick Saint John
Faculty of Business, 100 Tucker Park Road
Saint John, New Brunswick, E2L 4L5, Canada
Tel: +1 506 6485534
E-mail: [email protected]

Received Date: April 10, 2017; Accepted Date: April 21, 2017; Published Date: April 26, 2017

Citation: Wegener M, Labelle R (2017) Is Business Ethics the ‘Last Rampart’ Against Tax Aggressiveness? Int J Account Res 5: 153. doi:10.4172/2472-114X.1000153

Copyright: © 2017 Wegener M, et al. This is an open-access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.



This study examines the relationship between business ethics and tax aggressiveness. Building on the conceptual model of corporate moral development, we hypothesize and find a negative association between the level of business ethics and tax aggressiveness. For our sample of U.S. firms, companies with a higher level of business ethics are less likely to be tax aggressive. Our results are robust to the use of two proxies for tax aggressiveness: the ‘mainstream’ effective-tax-rate measure and the unrecognized tax benefit, which have been identified as capturing the least and the most aggressive tax positions respectively. While we support our business ethics prediction in both our models, we also find a positive relationship between the quality of corporate governance (measured without ethical characteristics generally associated with good corporate governance) and tax aggressiveness. Our interpretation of these results is that, while ethical firms are concerned about paying their fair share of taxes, shareholders’ interest still comes first.


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