Date of Degree
Danielle Higgins Green
Tax, Tax Avoidance, Turnover, Tax Director
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 tax avoidance decisions. This unique dataset allows me to identify 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 above their 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 find that tax directors face turnover when they try to manage earnings utilizing the tax accounts but fail to meet analyst forecasts. In addition, I examine samples of firms that engaged in aggressive tax avoidance, had tax-related restatements and had tax-related internal control weaknesses. For these three tests, I do not find evidence that tax directors face consequences, as measured by turnover, compared to a set of matched tax directors. Overall, these supplemental 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.
Schulman, Liora Y., "Do Tax Directors Face Consequences from Tax Avoidance?" (2017). CUNY Academic Works.