IDEAS home Printed from https://ideas.repec.org/a/bla/finrev/v60y2025i3p951-1002.html
   My bibliography  Save this article

Board busyness and financial leverage: The impact of corporate tax avoidance

Author

Listed:
  • Vu Quang Trinh
  • Teng Li
  • Oanh Ha
  • Jia Liu

Abstract

This study investigates the impact of “busy” independent directors on corporate financial leverage. Using a sample of 3321 Chinese listed firms from 2004 to 2019, we find that firms with busier boards tend to have higher leverage, with corporate tax avoidance acting as a mediating mechanism. Supporting the reputational incentive hypothesis, busy boards discourage aggressive tax avoidance strategies that would otherwise allow managers to accumulate excess cash reserves. Consequently, these firms become more reliant on external debt financing to meet potential investment needs. Our findings highlight the role of “busy” independent directors in mitigating agency conflicts and shaping financial strategies.

Suggested Citation

  • Vu Quang Trinh & Teng Li & Oanh Ha & Jia Liu, 2025. "Board busyness and financial leverage: The impact of corporate tax avoidance," The Financial Review, Eastern Finance Association, vol. 60(3), pages 951-1002, August.
    • Handle: RePEc:bla:finrev:v:60:y:2025:i:3:p:951-1002
    DOI: 10.1111/fire.12434
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/fire.12434
    Download Restriction: no
    File URL: https://libkey.io/10.1111/fire.12434?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:finrev:v:60:y:2025:i:3:p:951-1002. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/efaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.