The role of executives in foreign tax planning

Journal of Accounting and Economics · 2026 · Volume 81 · Issue 2

DOI: 10.1016/j.jacceco.2026.101899

Abstract

This study investigates the importance of top executives for foreign tax planning in multinational corporations. Applying incremental R 2 comparisons and Shapley Value decompositions, we find that executives account for meaningful variation in foreign tax planning and the number of foreign (tax haven) subsidiaries, but have limited influence on effective tax rates in nonhaven affiliates. We further provide initial evidence that executive influence declined following the Tax Cuts and Jobs Act of 2017 (TCJA), with the decrease being less pronounced for foreign effective tax rates than for domestic ones. Overall, our findings highlight how managers' influence varies with their firms’ internal structures and external policy changes. Our results contribute to the literature on executive effects, multinational tax planning, and the behavioral implications of tax policy reforms.

Keywords

Executives, Fixed effects, Managerial oversight, Multinational corporations, Tax Cuts and Jobs Act, Tax planning

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