Corporate Decision Structure and Tax Efficiency: Evidence From Tax Adjustment Speed

Liangliang Wang, Kaishu Wu, Dan Yang and Haiyang Zhang

Journal of Business Finance & Accounting, 2026, vol. 53, issue 2, 1077-1101

Abstract: This paper examines the impact of allocation of decision rights (i.e., decision structure) on tax efficiency, reflected by the speed at which firms adjust toward their target levels of tax avoidance. Relying on a Chinese setting, we find that listed business groups with a centralized decision structure exhibit faster tax adjustment speed, relative to those with a decentralized structure. This baseline finding is robust to a series of sensitivity checks. Cross‐sectional analyses indicate that our main findings are conditional on external environment uncertainty, internal information quality, demand for coordination, tax enforcement, managers’ tax expertise, and board busyness. We also show that centralization is associated with higher tax efficiency scores. Overall, our research highlights the importance of decision structure for achieving tax efficiency and thus provides value‐relevant implications for stakeholders.

Date: 2026
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