Santanu Mitro accepted for publication in Journal of Financial Stability

Mike Ilitch School of Business Professor of Accounting Santanu Mitra has been accepted for publication in the Journal of Financial Stability, which publishes theoretical and empirical economic and financial analysis of the causes, management, resolution and prevention of financial crises.

The paper, titled “Does Headquarters Location Matter in Corporate Tax Avoidance?” was co-authored by Mahmud Hossain (University of West Georgia).


This study examines whether corporate headquarters (CHQ) location influences firms’ tax avoidance practice. Our two-stage OLS regression analysis demonstrates that firms engage in less (more) tax avoidance when their CHQ are located near (farther away from) urban areas. Using recursive path analysis, we further examine the channels through which CHQ location impacts tax avoidance practice and find that the overall negative effect comprises a larger direct negative effect of CHQ location and a smaller indirect negative effect of CHQ location through financial reporting opacity and number of analysts following on firms’ tax avoidance. Furthermore, our nonrecursive path analysis shows that while CHQ location affects tax avoidance through direct and indirect channels, tax avoidance does not affect the choice of CHQ location. Finally, we find that when firms switch their CHQ from urban areas to rural areas (vice versa), their tax avoidance increases (decreases) accordingly. Our study thus provides a useful extension of tax avoidance studies and the literature on CHQ location effect on firms’ strategic decisions and performance.

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