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Top management conservatism and corporate risk strategies: Evidence from managers' personal political orientation and corporate tax avoidance

Year: 2014

Type: article

Abstract: We investigate whether managers' personal political orientation helps explain tax avoidance at the firms they manage. Results reveal the intriguing finding that, on average, firms with top executives who lean toward the R epublican P arty actually engage in less tax avoidance than firms whose executives lean toward the D emocratic P arty. We also examine changes in tax avoidance around CEO turnovers and find corroborating evidence. Additionally, we find that political orientation is helpful in explaining top management team composition and CEO succession. Our paper extends theory and research by (1) illustrating how tax avoidance can serve as another measure of corporate risk taking and (2) using political orientation as a proxy for managerial conservatism, which is an ex ante measure of a manager's propensity toward risk . Copyright © 2014 John Wiley & Sons, Ltd.

Source: Strategic Management Journal

DOI: 10.1002/smj.2313

Authors: Dane M. Christensen, Dan S. Dhaliwal, Steven Boivie, Scott D. Graffin

Institutions: Pennsylvania State University, University of Arizona, Korea University, Texas A&M University, University of Georgia

Language: English

Topic: Corporate Taxation and Avoidance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Peace, justice, and strong institutions

Open Access status: green

OpenAlex ID: W1899176997

FWCI: 49.6

Cites: 76

Cited by: 406

Related to: 10