Dual Holders and Corporate Tax Policies

Xiangge Wang and Kirsten A. Cook

Accounting and Finance, 2026, vol. 66, issue 1, 357-391

Abstract: We examine how creditors who are also equity holders of the same firm, referred to as dual holders, influence corporate tax policies. We predict that dual holders consider the interests of creditors while simultaneously wielding the influence of shareholders to encourage firms to approach a target level of tax avoidance while simultaneously reducing the associated tax risk, and our results are consistent with our predictions. In addition, lower tax risk is more pronounced when the dual holder is a lead lender, a dedicated investor, contributes more to the syndicated loan, or when the dual‐holding firm's default risk is high.

Date: 2026
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