Banker directors on board and corporate tax avoidance

Qian Song, Wenjie Ding, Iftekhar Hasan and Qingwei Wang

Journal of Empirical Finance, 2024, vol. 79, issue C

Abstract: We investigate how shareholder-debtholder conflict of interest affects the corporate tax avoidance using a unique setting of the affiliated and unaffiliated commercial bankers’ board representation. Consistent with the notion that board representation grants lenders’ access to private information that helps monitor and influence firms’ tax practice, we find that appointments of affiliated banker directors significantly reduce firms’ tax avoidance behavior, while appointing unaffiliated banker directors shows no such effect. The impact of affiliated banker directors on alleviating tax avoidance is stronger among firms with severer conflict of interest between shareholders and debtholders, specifically among firms with weaker corporate governance, higher financial leverage and higher CEO stock ownership.

Keywords: Banker directors; Corporate governance; Agency problem; Tax avoidance (search for similar items in EconPapers)
JEL-codes: G34 H25 H26 M41 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:empfin:v:79:y:2024:i:c:s0927539824000859

DOI: 10.1016/j.jempfin.2024.101551

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