The Burden of Attention: CEO Publicity and Tax Avoidance

33 Pages Posted: 19 Jan 2018 Last revised: 22 Feb 2018

Tinghua Duan

IESEG School of Management

Rong Ding

University of Warwick - Warwick Business School

Wenxuan Hou

University of Edinburgh - Business School

John Ziyang Zhang

University of Edinburgh

Date Written: December 29, 2017

Abstract

We use search volume index (SVI) for a CEO’s name and stock ticker from Google Trends to measure CEO publicity, and examine the competing hypotheses on its relation to tax avoidance. On the one hand, CEOs who receive more attention from retail investors may engage in tax evasion activities to meet investors’ performance expectations; on the other hand, they are more concerned with public image and avoiding being labeled as tax avoiders. Based on the CEOs of S&P 500 firms between 2004 and 2011, our finding supports the former and shows that CEOs with higher publicity manage to have a lower effective tax rate and cash effective tax rate. Such effect is moderated by board independence. Finally, firms with higher CEO publicity pay auditors higher tax fees, suggesting that these CEOs tend to use more tax planning services from auditors.

Keywords: CEO Publicity; CEOs; Tax Rate; Google Trends; Search Volume Index; Tax Avoidance

JEL Classification: G30; H26

Suggested Citation

Duan, Tinghua and Ding, Rong and Hou, Wenxuan and Zhang, John Ziyang, The Burden of Attention: CEO Publicity and Tax Avoidance (December 29, 2017). Journal of Business Research, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3103947

Tinghua Duan (Contact Author)

IESEG School of Management ( email )

Socle de la Grande Arche
1 Parvis de la Defense
Puteaux, Paris 92800
France

Rong Ding

University of Warwick - Warwick Business School ( email )

Coventry CV4 7AL
United Kingdom

Wenxuan Hou

University of Edinburgh - Business School ( email )

University of Edinburgh
29 Buccleuch Place
Edinburgh, Scotland EH8 9JS
United Kingdom

HOME PAGE: http://www.wenxuanhou.com

John Zhang

University of Edinburgh ( email )

Old College
South Bridge
Edinburgh, Scotland EH8 9JY
United Kingdom

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