Taxes and Director Independence: Evidence from Board Reforms Worldwide
Vanderbilt Owen Graduate School of Management Research Paper No. 2860362
Kenan Institute of Private Enterprise Research Paper No. 19-12
70 Pages Posted: 28 Oct 2016 Last revised: 1 Dec 2021
Date Written: November 30, 2021
Abstract
We examine whether changes to corporate governance resulting from board reforms affect corporate tax behavior. While the connection between corporate governance and tax behavior has been the subject of intense interest in the literature, a lack of exogenous variation in governance has hampered inferences. Our inquiry exploits a set of major board reforms that capture shocks to board reforms for firms in 31 countries. The results indicate that corporate tax avoidance decreases significantly following major board reforms. We find that the influence of board reforms on corporate tax behavior is stronger in firms with relatively higher agency conflicts and more opaque information environments.
Keywords: Corporate Taxation, Tax Avoidance, Board Reform, Corporate Governance
JEL Classification: H26, K42
Suggested Citation: Suggested Citation