Do Tax Directors Face Consequences from Tax Avoidance?

51 Pages Posted: 27 May 2020

See all articles by Liora Schulman

Liora Schulman

Pace University; Pace University - Lubin School of Business

Date Written: May 1, 2020


I examine the association between tax avoidance and tax director turnover. Specifically, I hand collect the names of tax directors and explore whether tax directors face consequences from making certain tax avoidance decisions. This unique dataset allows me to examine the tax director, who is directly responsible for taxes, which are one of the most significant accounts, and who prior literature has largely ignored due to a lack of availability of data. I find evidence that the tax director is more likely to face consequences, as measured by turnover, when their firm’s effective tax rate is higher than the industry median’s effective tax rate and when the effective tax rate is volatile. Accordingly, these results provide an understanding of the consequences of tax directors’ tax avoidance decisions. In supplemental analysis, I examine samples of firms that engaged in aggressive tax avoidance, had tax-related restatements and had tax-related internal control weaknesses. I do not find evidence that tax directors face consequences, as measured by turnover, compared to a set of matched tax directors for any of the supplemental tests. Overall, these findings suggest that tax directors face consequences related to middle range tax avoidance decisions but do not face consequences from very aggressive tax avoidance and GAAP-related tax decisions.

Keywords: Tax Avoidance, Tax Director

JEL Classification: M41

Suggested Citation

Schulman, Liora, Do Tax Directors Face Consequences from Tax Avoidance? (May 1, 2020). Pace University Research Paper, Available at SSRN: or

Liora Schulman (Contact Author)

Pace University ( email )

One Pace Plaza
White Plains, NY New York 10603
United States

Pace University - Lubin School of Business ( email )

1 Pace Plaza
New York, NY 10038-1502
United States

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