The separation of ownership and control and corporate tax avoidance

• 成果类型: Article
• 署名作者: Badertscher, Brad A.; Katz, Sharon P.; Rego, Sonja O.
• 署名单位: University of Notre Dame; Columbia University; Indiana University System; IU Kelley School of Business; Indiana University Bloomington
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2013.08.005
• 发表日期: 2013
• 关键词: sample selection bias; PRIVATE EQUITY; PUBLIC OWNERSHIP; earnings quality; AGENCY COSTS; FIRMS; debt; determinants; authority; accruals

摘要

We examine whether variation in the separation of ownership and control influences the tax practices of private firms with different ownership structures. Fama and Jensen (1983) assert that when equity ownership and corporate decision-making are concentrated in just a small number of decision-makers, these owner-managers will likely be more risk averse and thus less willing to invest in risky projects. Because tax avoidance is a risky activity that can impose significant costs on a firm, we predict that firms with greater concentrations of ownership and control, and thus more risk averse managers, avoid less income tax than firms with less concentrated ownership and control. Our results are consistent with these expectations. However, we also consider a competing explanation for these findings. In particular, we examine whether certain private firms enjoy lower marginal costs of tax planning, which facilitate greater income tax avoidance. Our results are consistent with the marginal costs of tax avoidance and the separation of ownership and control both influencing corporate tax practices. (C) 2013 Elsevier B.V. All rights reserved.