Top Management Acquisitive Behaviour and Tax Avoidance

49 Pages Posted: 17 Jan 2017 Last revised: 21 Feb 2017

See all articles by Ferdinand A. Gul

Ferdinand A. Gul

Deakin University - Department of Accounting

Mehdi Khedmati

Monash University

Syed Shams

University of Southern Queensland

Date Written: February 15, 2017


This study uses merger and acquisitions (M&A) activities as a proxy for managers’ aggressive style and shows that firms with a higher degree of acquisitions (dollar value of acquisitions and number of acquisition announced in a given year) are associated with more tax avoidance. This finding is consistent with the idea that managers of firms that make self-maximizing decisions at the cost of shareholders in the form of high M&A activities within a short period of time are also likely to take high-risk tax positions. We also document that the negative effect of high acquisitiveness on tax avoidance is prevalent when CEOs equity based compensation increases in post-acquisition period suggesting agency problem is a key driver of high acquisitiveness and tax avoidance behavior. Additional tests show that managerial acquisitiveness is different from overconfidence in explaining corporate tax avoidance activities of the bidding firms.

Keywords: Mergers and Acquisitions, Managerial Acquisitiveness, Tax Avoidance and CEOs Overconfidence

JEL Classification: G32, G34

Suggested Citation

Gul, Ferdinand A. and Khedmati, Mehdi and Shams, Syed, Top Management Acquisitive Behaviour and Tax Avoidance (February 15, 2017). 8th Conference on Financial Markets and Corporate Governance (FMCG) 2017, Available at SSRN: or

Ferdinand A. Gul

Deakin University - Department of Accounting ( email )


Mehdi Khedmati

Monash University ( email )

23 Innovation Walk
Wellington Road
Clayton, Victoria 3800

Syed Shams (Contact Author)

University of Southern Queensland ( email )

Springfield, Queensland 4300
+61734704551 (Phone)

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