The Impact of Organizational Culture on Corporate Tax Avoidance

ABSTRACT This paper investigates the impact of different dimensions of organizational culture on corporate tax avoidance. We use textual analysis to quantify the different organizational culture dimensions of firms in conjunction with those proposed in the Competing Values Framework, including Control‐, Collaborate‐, Compete‐, and Create‐oriented cultural dimensions. We find that firms with a Control‐oriented culture that values safety and predictability are less likely to be involved in tax avoidance. By contrast, firms with a Compete‐oriented culture that encourages risk‐taking and aggressive behavior are more likely to avoid paying tax. Smaller firms primarily drive the impact of organizational culture. Our results are robust to a battery of sensitivity analyses. Overall, these results provide novel evidence about the real effects of different dimensions of organizational culture on corporate tax avoidance.