Military experience and corporate tax avoidance |
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Authors: | Kelvin K F Law Lillian F Mills |
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Institution: | 1.Division of Accounting, Nanyang Business School,Nanyang Technological University,Singapore,Singapore;2.The Beverly H. and William P. O’Hara Chair in Business, Department of Accounting, McCombs School of Business,University of Texas at Austin,Austin,USA |
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Abstract: | We find that managers with military experience pursue less tax avoidance than other managers and pay an estimated $1–$2 million more in corporate taxes per firm-year. These managers also undertake less aggressive tax planning strategies with smaller tax reserves and fewer tax havens. Although they leave tax money on the table, boards hiring these managers benefit from reductions in other gray areas in corporate reporting. The broad implications are as follows: for employee selection, boards can consider employees’ personal characteristics as a control mechanism when outputs are difficult to contract ex ante or measure ex post. |
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