期刊
MANAGEMENT SCIENCE
卷 63, 期 10, 页码 3285-3310出版社
INFORMS
DOI: 10.1287/mnsc.2016.2510
关键词
tax avoidance; management style; managerial ability
资金
- Georgetown University's McDonough School of Business Center for Financial Markets and Policy
- Merage School at the University of California, Irvine
- Broad College of Business at Michigan State University
Most prior studies model tax avoidance as a function of firm-level characteristics and do not consider how individual executive characteristics affect tax avoidance. This paper investigates whether executives with superior ability to efficiently manage corporate resources engage in greater tax avoidance. Our results show that moving from the lower to upper quartile of managerial ability is associated with a 3.15% (2.50%) reduction in a firm's one-year (five-year) cash effective tax rate. We examine how higher-ability managers reduce income tax payments and find that they engage in greater state tax planning activities, shift more income to foreign tax havens, make more research and development credit claims, and make greater investments in assets that generate accelerated depreciation deductions. Identifying a manager characteristic related to firms' tax policy decisions adds to our understanding of the factors that explain the substantial variation in corporate income tax payments across firms.
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