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CEO marital status and corporate tax planning behavior

Author

Listed:
  • Ming-Hua Liu

    (University of Macau)

  • Shaohua Tian

    (Macau University of Science and Technology)

  • Yang Zhang

    (University of Macau
    University of Macau)

Abstract

This paper investigates the effect of the marital status of chief executive officers (CEOs) on their firms’ aggressive tax planning practices. Using a sample of S&P 1500 companies from 1996 to 2018, we find that firms led by unmarried CEOs exhibit a higher level of aggressive tax planning behavior than firms led by married CEOs after controlling for firm characteristics and CEO traits. This result is robust to alternative identification strategies including propensity-score-matching design, difference-in-difference approach, and instrumental variable technique. Moreover, the attenuating impact of CEO marriage on tax planning behavior is more pronounced among firms in non-consumer-oriented industries and when CEOs have a low pay-performance sensitivity. Further analysis of with-in CEO marital status variation shows that CEOs tend to be more tax aggressive after divorce. This study enhances our understanding of the corporate finance repercussion of CEOs’ personal traits and in particular of the wide variation of firms’ aggressive tax planning.

Suggested Citation

  • Ming-Hua Liu & Shaohua Tian & Yang Zhang, 2023. "CEO marital status and corporate tax planning behavior," Review of Quantitative Finance and Accounting, Springer, vol. 61(4), pages 1207-1242, November.
    • Handle: RePEc:kap:rqfnac:v:61:y:2023:i:4:d:10.1007_s11156-023-01178-9
    DOI: 10.1007/s11156-023-01178-9
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    More about this item

    Keywords

    CEO; Marital status; Aggressive tax planning;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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