Aug. 15, 2018

While attending the 2018 American Accounting Association Annual Meeting in National Harbor,
Maryland, School of Accounting assistant professor Chelsea Rae Austin received the 2017 Journal of
American Taxation Association Outstanding Paper Award for her paper, “An Examination of
Reputational Costs and Tax Avoidance: Evidence from Firms with Valuable Consumer Brands,” published
in spring 2017.

Austin co-authored the paper with Ryan Wilson (University of Oregon, Lundquist College of Business).
Austin states that the topic of this paper evolved from her interest in “the determinants and
consequences of tax avoidance.” In this paper, Austin and Wilson found that valuable brand ownership
is a deterrent to tax avoidance.

Abstract
We expect firms with the greatest exposure to reputational damage among consumers will engage in
lower levels of tax avoidance to minimize unwanted scrutiny that could impair the firms' reputation. We
identify a set of firms with valuable consumer reputation using Harris Interactive's EquiTrend survey,
which surveys consumers about their perceptions of valuable and prominent brands. We find evidence in
support of our hypothesis that firms with valuable brands will engage in less tax avoidance. Specifically,
we find a positive and significant association between our measure of reputation and both the GAAP and
cash effective tax rates (measured over one and three years). We find mixed evidence on whether there
is a negative and significant association between reputation and the probability the firm is engaging in tax
sheltering.