Exploiting staggered changes in state-level corporate income taxes, we document that corporate social responsibility (CSR) performance improves substantially following tax cuts, reflecting firms' reliance on internal funds for CSR investments. However, tax increases do not significantly weaken CSR performance, implying that CSR commitments are sticky on the upside. Tax cuts enhance CSR performance more for firms with greater tax exposure, tighter financial constraints, better corporate governance, stronger prosocial preferences, or higher risk. Additional analysis of the 2017 federal tax reform substantiates the CSR effect of tax cuts. Overall, our findings highlight essential CSR features and illustrate how corporate tax policy drives corporate sustainability.

Examining test statistics from articles in six leading accounting journals, we detect discontinuities in their distributions around conventional significance thresholds ( p‐ values of 0.05 and 0.01) and find an unusual abundance of test statistics that are just significant. Further analysis reveals that these discontinuities are more prominent in studies with smaller samples and are more salient in experimental than in archival studies. The discontinuity discrepancy between experimental and archival studies relates to several proxies for researcher degrees of freedom. Nevertheless, this evidence does not imply that experimental research is more prone to questionable research practices than archival studies. Overall, our findings speak to the concern of whether accounting researchers could exercise undisclosed discretion to obtain and report statistically significant results. Based on our results, a healthy skepticism of some just‐significant test statistics is warranted.

We document that firms in more politically corrupt regions of China adopt more conservative accounting. The relation between local political corruption and accounting conservatism weakens after China’s anticorruption campaign launched in 2012 and in firms with a lower risk of expropriation by corrupt officials, stronger incentives to report earnings aggressively, or greater gains from corruption. Further analysis shows that accounting conservatism and alternative corporate strategies complement each other in shielding firms against corrupt officials’ expropriation of corporate resources. Our study provides novel evidence about an accounting approach used by firms in response to perceived political costs.