Military Experience and Corporate Tax Avoidance
57 Pages Posted: 2 Aug 2013 Last revised: 28 Sep 2016
Date Written: September 27, 2016
We find that managers with military experience pursue less tax avoidance than other managers and pay an estimated $1–$2 million more in corporate taxes per firm-year. These managers also undertake less aggressive tax planning strategies with smaller tax reserves and fewer tax havens. Although they leave tax money on the table, boards hiring these managers benefit from reductions in other gray areas in corporate reporting. The broad implications are as follows: For employee selection, boards can consider employees’ personal characteristics as a control mechanism when outputs are difficult to contract ex ante or measure ex post.
Keywords: Tax Avoidance, Corporate Financial Reporting, Military Experience
JEL Classification: H25, H26, M41, G30
Suggested Citation: Suggested Citation