Tax avoidance, managerial ownership, and agency conflicts

Nopparat Wongsinhirun, Pattanaporn Chatjuthamard, Pandej Chintrakarn, Pornsit Jiraporn

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Abstract

We examine how corporate tax avoidance is influenced by managerial ownership. Our results, based on a large sample of nearly 30,000 observations across a quarter of a century, demonstrate that firms where managers hold more shares exhibit less tax avoidance. Our findings corroborate the notion that corporate tax avoidance is primarily motivated by agency conflicts and is significantly mitigated by higher managerial ownership, which brings managers and shareholders’ interests into better alignment. Further analysis corroborates the results, i.e., propensity score matching, an instrumental variable analysis, and using alternative measures of tax avoidance.

Original languageEnglish (US)
Article number104937
JournalFinance Research Letters
Volume61
DOIs
StatePublished - Mar 2024

All Science Journal Classification (ASJC) codes

  • Finance

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