Consequences of Executive Focus on Support Activities: Evidence from Executive Influence on Firm Tax Strategy
52 Pages Posted: 15 Mar 2017
Date Written: March 13, 2017
Conventional wisdom suggests that executives who focus on the support activities of the firm do so at the expense of the core activities of the firm. However, recent research and events suggest value from executives focusing on all activities (core and support) of the firm. Given the extreme pay of executives, understanding this issue is important to boards of directors and shareholders. Using executive influence on firm tax strategy as a proxy for executive focus on support activities, I find that executive focus on support activities is associated with poorer firm performance and negative executive labor market consequences. These results are consistent with executives focusing on support activities and neglecting core activities. My results are robust to alternative proxies for support focus, firm performance, and executive labor market consequences.
Keywords: Support Activities, Executives, Tax Strategy
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