Accounting & Finance Research Community Seminar – Professor Konstantinos Stathopoulos

Title: Managerial short-termism and corporate tax avoidance
Date: 19 April 2022
Time: 14:00-15:00
Location: NUBS 2.14

Guest Speaker: Professor Konstantinos Stathopoulos, Alliance Manchester Business School

If you would like to attend, please register using the following link: https://forms.office.com/r/xfXtB4itu9.

Abstract
CEOs with substantial short-term monetary incentives behave myopically out of concerns for the stock price. One potential target for managerial myopia is corporate tax avoidance. We show that, ceteris paribus, CEO short-term monetary incentives are associated with declines in cash effective tax rates. This finding suggests that CEOs increase corporate tax avoidance in years with strong anticipation for equity sales. Our finding is insensitive to robustness tests, and additional tests confirm that the underlying economic mechanism is CEO equity sales. We address endogeneity concerns with the use of equity vesting, and options acceleration before the adoption of FAS 123R as events plausibly exogenous to the current corporate tax planning environment.