We find strong negative associations between social capital and corporate tax avoidance, as captured by effective tax rates and book-tax differences. We investigate whether the levels of social capital in US counties, as captured by strength of civic norms and density of social networks in the counties, are systematically related to tax avoidance activities of corporations with headquarters located in the counties. We conclude that social capital surrounding corporate headquarters provides environmental influences constraining corporate tax avoidance. Additionally, we find corroborating evidence using firms involved in a social-capital-changing headquarter relocation. These results are incremental to the effects of local religiosity and firm culture toward socially-irresponsible activities, are robust to using organ donation as an alternative social capital proxy and fixed effect regressions, and extend to aggressive tax avoidance activities including the probability of tax sheltering and the use of off-shore tax-haven subsidiaries and uncertain tax positions. Together, our results indicate that altruism increases when resources and cultural values provide objective and subjective means for pursuing personally meaningful goals and that altruistic behaviors may be enhanced by societal changes that promote well-being.
Moreover, these indirect effects increased as individualist values increased within the subset of countries ( n = 90) with available data. Consistent with prior work, our results showed that SWB mediated the relationship between two objective measures of well-being (wealth and health) and altruism ( n = 130). We compiled data on seven altruistic behaviors across 48 to 152 nations and found evidence that these behaviors reflect a latent construct positively associated with national-level subjective well-being (SWB) and individualist values, even when we controlled for national-level wealth, health, education, and shared cultural history. The geographic prevalence of various altruistic behaviors (nonreciprocal acts that improve other people’s welfare) is not uniformly distributed, but whether this reflects variation in a superordinate construct linked to national-level outcomes or cultural values is unknown.
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