Military experience and corporate tax avoidance
Kelvin K. F. Law, Lillian F. Mills
Review of Accounting Studies · 2017 · Volume 22 · Issue 1
DOI: 10.1007/s11142-016-9373-z
Abstract
We find that managers with military experience pursue less tax avoidance than other managers and pay an estimated $1–$2 million more in corporate taxes per firm-year. These managers also undertake less aggressive tax planning strategies with smaller tax reserves and fewer tax havens. Although they leave tax money on the table, boards hiring these managers benefit from reductions in other gray areas in corporate reporting. The broad implications are as follows: for employee selection, boards can consider employees’ personal characteristics as a control mechanism when outputs are difficult to contract ex ante or measure ex post.
Keywords
Tax avoidance, Corporate financial reporting, Military experience
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