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The Unintended Effects of Director and Officer Liability Protection on Corporate Tax Avoidance: A Review of the Literature

Year: 2025

Type: article

Abstract: This qualitative literature review investigates the unintended consequences of director and officer (D&O) liability protection on corporate tax avoidance. By examining relevant studies, the review reveals that D&O liability protection can inadvertently foster aggressive tax avoidance behaviors due to the moral hazard it creates for executives. While these protections aim to shield executives from personal financial risks, they may unintentionally encourage risky tax strategies that prioritize short-term gains over long-term corporate sustainability. The findings highlight the importance of strong corporate governance and regulatory reforms to mitigate such consequences. This review contributes to understanding the complex relationship between D&O liability protection and corporate tax avoidance, emphasizing the need for more effective oversight and policies to align executive decision-making with broader public and corporate interests.

Source: International Journal of Management Accounting & Finance (KBIJMAF)

DOI: 10.70142/kbijmaf.v2i2.292

Authors: Yessica Amelia, Muhammad Rizal, Farah Qalbia

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: bronze

OpenAlex ID: W4412810458

FWCI:

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Related to: 10