Do information sources matter in corporate tax avoidance? The roles of peer effects and director interlocks

Yi-Hsing Liao (), Teng-Sheng Sang () and Yuan-Tang Tsai ()
Additional contact information
Yi-Hsing Liao: Chung Yuan Christian University
Teng-Sheng Sang: Chung Yuan Christian University
Yuan-Tang Tsai: National Taipei University

Review of Quantitative Finance and Accounting, 2022, vol. 59, issue 1, No 11, 339-382

Abstract: Abstract How information sources affect a company’s tax avoidance behavior is an important but still unresolved issue. This paper examines the effect of information sources in the form of peer effects and director interlocks on corporate tax avoidance. We find that a company has a higher level of tax avoidance if its industry peers take an aggressive tax avoidance strategy, matching the herding effect found in tax avoidance behavior. The effect is stronger for firms with more connected directors, which is consistent with the spillover effect of tax avoidance behavior through shared directors. We further provide evidence suggesting that private information conveyed by interlocking directors is more valuable to a focal firm under a poor peer information environment. Overall, our empirical results suggest that private information spread by interlocking directors is more influential in industries with a poor peer information environment, supporting the view that the partial substitution of private information for public information is a valuable source of peer information.

Keywords: Tax avoidance; Peer effects; Director interlocks; Peer information environment (search for similar items in EconPapers)
JEL-codes: D82 H26 M41 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://link.springer.com/10.1007/s11156-022-01042-2 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:rqfnac:v:59:y:2022:i:1:d:10.1007_s11156-022-01042-2

Ordering information: This journal article can be ordered from
http://www.springer.com/finance/journal/11156/PS2

DOI: 10.1007/s11156-022-01042-2

Access Statistics for this article

Review of Quantitative Finance and Accounting is currently edited by Cheng-Few Lee

More articles in Review of Quantitative Finance and Accounting from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().