The Impact of Corporate Tax Avoidance on Board of Directors and CEO Reputation

Roman Lanis (), Grant Richardson (), Chelsea Liu () and Ross McClure ()
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Roman Lanis: University of Technology Sydney
Grant Richardson: The University of Adelaide
Chelsea Liu: The University of Adelaide
Ross McClure: University of Technology Sydney

Journal of Business Ethics, 2019, vol. 160, issue 2, No 10, 463-498

Abstract: Abstract This study examines the impact of corporate tax avoidance on board of directors and chief executive officer (CEO) reputation. Our regression results show that when firms engage in tax avoidance, both directors and CEOs, on average, are rewarded by improvements in their reputations as proxied by an increased number of outside board seats. In particular, both independent directors and non-CEO executive directors undergo positive changes in reputation. We also find that CEOs of tax-aggressive firms experience enhanced reputations by gaining extra board seats. Our main regression results hold based on additional analyses. Overall, this study provides important empirical evidence confirming an association between tax avoidance and the individual reputations of directors and CEOs.

Keywords: Tax avoidance; Corporate reputation; Board of directors; Chief executive officer (CEO) (search for similar items in EconPapers)
JEL-codes: H25 H26 M14 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (11)

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DOI: 10.1007/s10551-018-3949-4

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