Overconfidence and Corporate Tax Policy

James A. Chyz, Fabio B. Gaertner, Asad Kausar and Luke Watson ()
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James A. Chyz: University of Tennessee
Fabio B. Gaertner: University of Wisconsin-Madison
Asad Kausar: American University
Luke Watson: Drexel University

Review of Accounting Studies, 2019, vol. 24, issue 3, No 10, 1114-1145

Abstract: Abstract Using a sample of firms experiencing exogenous CEO departures, we investigate whether firms with overconfident CEOs avoid more tax. We find robust evidence of a positive relation between proxies for corporate tax avoidance and CEO overconfidence. Because our empirical tests use a panel of firm-years with exogenous CEO departures and include controls for stationary firm effects as well as observable firm characteristics, we can better isolate the role of an idiosyncratic personality trait (i.e., overconfidence) on corporate tax outcomes, thus adding to the literatures on overconfidence, managerial effects, and tax avoidance.

Keywords: Overconfidence; Tax avoidance; Manager effects (search for similar items in EconPapers)
JEL-codes: D80 H25 M40 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (21)

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DOI: 10.1007/s11142-019-09494-z

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