Do UK outside CEOs engage more in tax planning than the insiders?
Firms engage in tax planning to varying extents. One potential determinant of such variations may be the characteristics of senior executives. The objective of this study is to investigate whether CEO origin (insiders or outsiders) and departing CEO tenure are significant in explaining the extent...
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| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
Penerbit Universiti Kebangsaan Malaysia
2015
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| Online Access: | http://journalarticle.ukm.my/9613/1/12185-33203-1-SM.pdf http://journalarticle.ukm.my/9613/ http://ejournals.ukm.my/pengurusan/issue/view/749 |
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| Summary: | Firms engage in tax planning to varying extents. One potential determinant of such
variations may be the characteristics of senior executives. The objective of this study is to
investigate whether CEO origin (insiders or outsiders) and departing CEO tenure are
significant in explaining the extent of corporate tax planning. The sample is non-financial
London Stock Exchange listed firms from 2005 to 2011. Upon regressing tax planning on
CEO origin, departing CEO tenure and other control variables, we find robust evidence that
outsiders are associated with higher levels of tax planning than the insiders. Our results also
reveal a negative moderating influence of departing CEO tenure on tax planning levels of
current CEOs. Collectively, this paper provides the first UK evidence on the influence of
CEO origin and departing CEO tenure on tax planning. This paper has important
implications for tax authorities since it highlights CEO characteristics can be relevant
indicators in a tax avoidance-risk assessment exercise. The findings will also be of interest to
management and its board when considering factors of interest in a turnover scenario. |
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