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Tax-savvy executives

Author

Listed:
  • Thomas R. Kubick

    (University of Nebraska – Lincoln)

  • Yijun Li

    (Erasmus University Rotterdam)

  • John R. Robinson

    (Texas A&M University)

Abstract

We investigate why firms include individuals with significant professional tax experience on their senior management team and the consequences associated with the presence of these tax-savvy executives. We find that past performance, network connections, geographic location, and tax-rate level, relative to industry peers, are all significant determinants of having a tax-savvy executive on the senior management team. Using propensity-score matching, we find that effective tax rates decrease substantially after the addition of a tax-savvy executive to senior management and revert following the departure of such an executive. We connect the changes in effective tax rates to changes in the usage of foreign subsidiaries in low tax jurisdictions.

Suggested Citation

  • Thomas R. Kubick & Yijun Li & John R. Robinson, 2020. "Tax-savvy executives," Review of Accounting Studies, Springer, vol. 25(4), pages 1301-1343, December.
    • Handle: RePEc:spr:reaccs:v:25:y:2020:i:4:d:10.1007_s11142-020-09543-y
    DOI: 10.1007/s11142-020-09543-y
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    3. C. S. Agnes Cheng & Jaehyeon Kim & Mooweon Rhee & Jian Zhou, 2022. "Time Orientation in Languages and Tax Avoidance," Journal of Business Ethics, Springer, vol. 180(2), pages 625-650, October.

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    More about this item

    Keywords

    Corporate taxes; Effective tax rates; Employment history; Professional experience;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation

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