The Inclusion of General Counsel in Top Management and Tax Avoidance

63 Pages Posted: 16 Dec 2014 Last revised: 19 Jul 2015

Beng Wee Goh

Singapore Management University - School of Accountancy

Jimmy Lee

Singapore Management University - School of Accountancy

Jeffrey Ng

Hong Kong Polytechnic University - School of Accounting and Finance

Date Written: July 8, 2015

Abstract

We examine whether the inclusion of general counsel in top management is associated with a firm’s tax avoidance. We find that firms with general counsel as part of the top management team have lower GAAP effective tax rate, more uncertain tax positions, a higher likelihood of engaging in tax shelter activities, and more tax haven countries in which the firm reports a significant subsidiary, relative to firms without a general counsel in top management. In addition, we find that among firms with general counsel in top management, tax avoidance is greater when (1) the general counsel has tax-related expertise, (2) the firm hires an external auditor with tax expertise or purchases more tax services from its external auditor, and (3) the CEO has more power over the general counsel.

Keywords: Top management composition, general counsel, tax avoidance

JEL Classification: G34; G38; H26; M41

Suggested Citation

Goh, Beng Wee and Lee, Jimmy and Ng, Jeffrey, The Inclusion of General Counsel in Top Management and Tax Avoidance (July 8, 2015). Available at SSRN: https://ssrn.com/abstract=2538292 or http://dx.doi.org/10.2139/ssrn.2538292

Beng Wee Goh

Singapore Management University - School of Accountancy ( email )

60 Stamford Road
Singapore 178900
Singapore

Jimmy Lee

Singapore Management University - School of Accountancy ( email )

60 Stamford Road
Singapore, 178900
Singapore
(65) 6808 5234 (Phone)

Jeffrey Ng (Contact Author)

Hong Kong Polytechnic University - School of Accounting and Finance ( email )

Hung Hom
Kowloon
Hong Kong

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