CFO Work Experience and Tax Avoidance: Evidence from China

55 Pages Posted: 1 Dec 2022 Last revised: 23 Jan 2023

See all articles by Panagiotis Karavitis

Panagiotis Karavitis

University of Glasgow - Adam Smith Business School

Pantelis Kazakis

University of Glasgow - Adam Smith Business School

Tianyue Xu

University of Glasgow - Adam Smith Business School

Date Written: November 25, 2022

Abstract

We ask whether the general managerial skills that CFOs gain from lifetime work experience affect corporate tax avoidance. We use a sample of hand-collected data for Chinese-listed companies to develop and validate a CFO managerial skills index based on four dimensions of CFO work experience: (1) the number of current positions a CFO holds, (2) the number of functional departments a CFO has worked in, (3) the number of firms the CFO has worked for, and (4) whether the CFO has political connections. We find that CFOs with high general managerial skills are more likely to engage in aggressive tax avoidance. This effect is weaker among CFOs who are approaching retirement, are in their first year of employment, or are too busy. Moreover, we find that CFOs with general management skills are more likely to adjust corporate tax avoidance to levels similar to or lower than their peers.

Keywords: Chief Financial Officer (CFO), work experience, managerial skills, tax avoidance

JEL Classification: G30, H26, J24, M41

Suggested Citation

Karavitis, Panagiotis and Kazakis, Pantelis and Xu, Tianyue, CFO Work Experience and Tax Avoidance: Evidence from China (November 25, 2022). Available at SSRN: https://ssrn.com/abstract=4286164 or http://dx.doi.org/10.2139/ssrn.4286164

Panagiotis Karavitis

University of Glasgow - Adam Smith Business School ( email )

University Avenue
Glasgow
Glasgow, West End G12 8QQ
United Kingdom

HOME PAGE: http://https://www.gla.ac.uk/schools/business/staff/panagiotiskaravitis/

Pantelis Kazakis (Contact Author)

University of Glasgow - Adam Smith Business School ( email )

Adam Smith Business School
Gilbert Scott Building
Glasgow, Scotland G12 8QQ
United Kingdom

HOME PAGE: http://sites.google.com/site/panteliskazakis/home

Tianyue Xu

University of Glasgow - Adam Smith Business School ( email )

Adam Smith Business School
University Avenue
Glasgow, Scotland G12 8QQ
United Kingdom

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