Taxes and Director Independence: Evidence from Board Reforms Worldwide

70 Pages Posted: 28 Oct 2016 Last revised: 28 Sep 2021

See all articles by Qingyuan Li

Qingyuan Li

Wuhan University - School of Economics and Management

Edward L. Maydew

University of North Carolina at Chapel Hill

Richard H. Willis

Vanderbilt University - Accounting

Li Xu

Washington State University, Vancouver

Date Written: September 27, 2021

Abstract

We examine whether changes to corporate governance resulting from board reforms affect corporate tax behavior. While the connection between corporate governance and tax behavior has been the subject of intense interest in the literature, a lack of exogenous variation in governance has hampered inferences. Our inquiry exploits a set of major board reforms that capture shocks to board reforms for firms in 31 countries. The results indicate that corporate tax avoidance decreases significantly following major board reforms. We find that the influence of board reforms on corporate tax behavior is stronger in firms with relatively higher agency conflicts and more opaque information environments.

Keywords: Corporate Taxation, Tax Avoidance, Board Reform, Corporate Governance

JEL Classification: H26, K42

Suggested Citation

Li, Qingyuan and Maydew, Edward L. and Willis, Richard H. and Xu, Li, Taxes and Director Independence: Evidence from Board Reforms Worldwide (September 27, 2021). Vanderbilt Owen Graduate School of Management Research Paper No. 2860362, Kenan Institute of Private Enterprise Research Paper No. 19-12, Available at SSRN: https://ssrn.com/abstract=2860362 or http://dx.doi.org/10.2139/ssrn.2860362

Qingyuan Li

Wuhan University - School of Economics and Management ( email )

Wu Han, Hu-Bai 430072
China

Edward L. Maydew

University of North Carolina at Chapel Hill ( email )

McColl Building
Chapel Hill, NC 27599-3490
United States
919-843-9356 (Phone)

HOME PAGE: http://www.kenan-flagler.unc.edu/faculty/directory/accounting/edward-maydew

Richard H. Willis

Vanderbilt University - Accounting ( email )

Nashville, TN 37203
United States
615-343-1050 (Phone)
615-343-7177 (Fax)

Li Xu (Contact Author)

Washington State University, Vancouver ( email )

14204 NE Salmon Creek Avenue
Vancouver, WA WA 98686-9600
United States

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