The Effect Of Ceo Power On Tax Avoidance: Evidence From Taiwan

This paper explores the relationship between CEO power and firms’ tax avoidance. The study examines listed and OTC companies from Taiwan. Data from 2010 to 2016 on sampled firms were taken from the database of Taiwan Economic Journal. Research findings indicate that the higher the comprehensive power of CEOs, the more tax avoidance is mitigated in general. This finding is consistent with the stewardship theory that CEOs care about business reputation and corporate social responsibility. The paper divides CEO power into four categories. For CEOs with high structural rights, there is no taxation avoidance significance. CEOs with high ownership power exhibit taxation behavior consistent with the convergence-of-interest hypothesis. They reduce tax avoidance while seeking their own interests. Based on their professional experience, CEOs with strong expert power are vigilant about reputational risks; hence, they avoid tax avoidance and have a conservative approach to investments. CEOs with high prestige power can learn from their networks about seasoned practices in tax avoidance who are proactive in tax avoidance