Corporate tax avoidance: The impact of performance above aspiration and CEO experience

Jiaojiao Qin (), Jun Lin () and Yan Xin ()
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Jiaojiao Qin: Xi’an Jiaotong University
Jun Lin: Xi’an Jiaotong University
Yan Xin: LUT University

Asia Pacific Journal of Management, 2024, vol. 41, issue 4, No 19, 2331 pages

Abstract: Abstract This study provides a new behavioral explanation of corporate tax avoidance. Drawing on tax avoidance research and the insights from performance feedback literature, we identify performance above aspiration as an important antecedent of corporate tax avoidance. We also explore the contingency effect of CEO experience since it may influence how the CEO views performance above aspiration and implement tax avoidance decisions. This study considers two main aspects of CEO experience: CEO tenure (firm experience) and CEO financial experience (functional experience). Using a panel sample of Chinese listed companies from 2009 to 2018, we find that as performance rises above aspiration, firms increase tax avoidance at first, but, from a certain point onwards, they reduce such activities. We also find that this inverted U-shaped relationship is weakened by CEO tenure but strengthened by CEO financial experience.

Keywords: Performance above aspiration; Tax avoidance; Curvilinearity; CEO experience (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s10490-023-09912-6

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