Corporate Tax Avoidance and Sales: Microevidence and Aggregate Implications

This paper examines the effect of corporate tax avoidance (CTA) on U.S. firm-level sales and its aggregate implications. In theory, CTA gives a competitive edge to avoiding firms, which affects the distribution of sales in the economy. In practice, we find a causal impact of CTA on firm-level sales using a broad set of measures of tax avoidance and different identification strategies. Combining microestimates and the model, we assess how changes in CTA over the past two decades have shaped the distribution of sales across U.S. industries. Although the effects vary by sector, rising CTA among large firms has reinforced their dominant positions, contributing to increased concentration, in several key industries. This paper was accepted by Maria Guadalupe, business strategy. Funding: Financial support from the ENS Paris-Saclay Booster’s program, from the SSHRC [Insight Development Grant 207-2018-2019-Q1-00406], from the UQAM research chair on the local impact of multinationals, and from the Fonds de la Recherche Scientifique – FNRS [Grant No. F.4533.23] is gratefully acknowledged. Supplemental Material: The data files are available at https://doi.org/10.1287/mnsc.2024.05773 .

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Publication Details

Journal
Management Science
Published
2025-12-08
DOI
https://doi.org/10.1287/mnsc.2024.05773
Citations
18
Primary Topic
Corporate Taxation and Avoidance
Type
article
Field-Weighted Citation Impact
19.55

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article

Corporate Tax Avoidance and Sales: Microevidence and Aggregate Implications

Mathieu Parenti, Farid Toubal, Julien Martin
18 citations
Management Science
Corporate Taxation and Avoidance
19.55
article

Corporate Tax Avoidance and Sales: Microevidence and Aggregate Implications

Mathieu Parenti, Farid Toubal, Julien Martin
article en
18 citations

Abstract

This paper examines the effect of corporate tax avoidance (CTA) on U.S. firm-level sales and its aggregate implications. In theory, CTA gives a competitive edge to avoiding firms, which affects the distribution of sales in the economy. In practice, we find a causal impact of CTA on firm-level sales using a broad set of measures of tax avoidance and different identification strategies. Combining microestimates and the model, we assess how changes in CTA over the past two decades have shaped the distribution of sales across U.S. industries. Although the effects vary by sector, rising CTA among large firms has reinforced their dominant positions, contributing to increased concentration, in several key industries. This paper was accepted by Maria Guadalupe, business strategy. Funding: Financial support from the ENS Paris-Saclay Booster’s program, from the SSHRC [Insight Development Grant 207-2018-2019-Q1-00406], from the UQAM research chair on the local impact of multinationals, and from the Fonds de la Recherche Scientifique – FNRS [Grant No. F.4533.23] is gratefully acknowledged. Supplemental Material: The data files are available at https://doi.org/10.1287/mnsc.2024.05773 .

Management Science
Université du Québec à Montréal (CA), Centre d'Etudes Prospectives et d'Informations Internationales (FR), Institut National de Recherche pour l'Agriculture, l'Alimentation et l'Environnement (FR), Centre d'Économie de la Sorbonne (FR), Laboratoire d’Economie de Dauphine (FR), Centre de Recherche en Économie et Statistique (FR), Université Paris Dauphine-PSL (FR)
Université du Québec à Montréal
Openalex Percentile: Top 1%
Corporate Taxation and Avoidance
19.55
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