Tax Planning Knowledge Diffusion via the Labor Market

We examine the extent to which labor market facilitates diffusion of tax-planning knowledge across firms. Using a novel data set tax department employee movements between S&P 1500 firms, we find that firms experience an increase in their planning after hiring from tax-aggressive firm. This finding is robust various research designs and specifications. Consistent with driving result, benefits are more substantial when involved director-level role has experience. Further tests suggest highly specific nature: avoidance larger former similar (i.e., operating same sector or having foreign operations), likely hire employees characteristics. Finally, do not prior firm’s changes leaves firm, suggesting simply spreads firm does leave Our study documents first order our findings human capital central determinant outcomes. paper was accepted by Suraj Srinivasan, accounting. Supplemental Material: The online appendix available at https://doi.org/10.1287/mnsc.2023.4741 .