Dynamic system GMM analysis
| Dependent variable = △ETR1 | Two-step system GMM | |
|---|---|---|
| (1) | (2) | |
| △Financial_Ratio | −0.042*** | |
| (−2.927) | ||
| △RegulatoryFinancial_Ratio | 2.551* | |
| (1.948) | ||
| △NonregulatoryFinancial_Ratio | −0.156*** | |
| (−2.681) | ||
| LAGGED_△ETR1 | −0.445*** | −0.579*** |
| (−95.185) | (−35.511) | |
| △SOE | 0.005 | 0.011 |
| (0.479) | (0.261) | |
| △Size | 0.019*** | 0.037*** |
| (5.239) | (3.271) | |
| △Age | 0.017* | 0.047** |
| (1.844) | (2.027) | |
| △Tangibility | 0.012 | 0.006 |
| (0.584) | (0.107) | |
| △Lev | 0.009 | 0.005 |
| (0.715) | (0.145) | |
| △RD | −0.134 | 0.104 |
| (−1.028) | (0.366) | |
| △ROA | 0.071*** | 0.005 |
| (2.816) | (0.069) | |
| △Growth | 0.011*** | 0.012*** |
| (8.560) | (3.353) | |
| △Duality | 0.009** | 0.011 |
| (2.185) | (1.074) | |
| △Independence | 0.085*** | 0.162** |
| (3.191) | (2.026) | |
| △Female | 0.018 | 0.086 |
| (0.698) | (1.231) | |
| △Loss | 0.007* | −0.016 |
| (1.780) | (−1.447) | |
| △TotalAccruals | −0.032*** | −0.051* |
| (−2.844) | (−1.803) | |
| △TMT_Age | −0.075** | −0.105 |
| (−2.310) | (−1.132) | |
| △TMT_Foreign | −0.022 | −0.025 |
| (−1.382) | (−0.434) | |
| △TMT_Academic | −0.022 | −0.030 |
| (−1.093) | (−0.660) | |
| _cons | −0.198* | 0.030 |
| (−1.756) | (0.060) | |
| Year fixed effects? | Yes | Yes |
| Industry fixed effects? | Yes | Yes |
| Province fixed effects? | Yes | Yes |
| No. of obs | 14,131 | 14,131 |
| No. of firms | 2,575 | 2,575 |
| Sargan test over-identification – χ2 (p-value) | 1474.88 (0.000) | 10769.56 (0.000) |
| Difference-in-Hansen test of exogeneity - p-value | 1.000 | 1.000 |
| Dependent variable | Two-step system | |
|---|---|---|
| (1) | (2) | |
| −0.042*** | ||
| (−2.927) | ||
| 2.551* | ||
| (1.948) | ||
| −0.156*** | ||
| (−2.681) | ||
| −0.445*** | −0.579*** | |
| (−95.185) | (−35.511) | |
| 0.005 | 0.011 | |
| (0.479) | (0.261) | |
| 0.019*** | 0.037*** | |
| (5.239) | (3.271) | |
| 0.017* | 0.047** | |
| (1.844) | (2.027) | |
| 0.012 | 0.006 | |
| (0.584) | (0.107) | |
| 0.009 | 0.005 | |
| (0.715) | (0.145) | |
| −0.134 | 0.104 | |
| (−1.028) | (0.366) | |
| 0.071*** | 0.005 | |
| (2.816) | (0.069) | |
| 0.011*** | 0.012*** | |
| (8.560) | (3.353) | |
| 0.009** | 0.011 | |
| (2.185) | (1.074) | |
| 0.085*** | 0.162** | |
| (3.191) | (2.026) | |
| 0.018 | 0.086 | |
| (0.698) | (1.231) | |
| 0.007* | −0.016 | |
| (1.780) | (−1.447) | |
| −0.032*** | −0.051* | |
| (−2.844) | (−1.803) | |
| −0.075** | −0.105 | |
| (−2.310) | (−1.132) | |
| −0.022 | −0.025 | |
| (−1.382) | (−0.434) | |
| −0.022 | −0.030 | |
| (−1.093) | (−0.660) | |
| −0.198* | 0.030 | |
| (−1.756) | (0.060) | |
| Yes | Yes | |
| Yes | Yes | |
| Yes | Yes | |
| 14,131 | 14,131 | |
| 2,575 | 2,575 | |
| 1474.88 (0.000) | 10769.56 (0.000) | |
| 1.000 | 1.000 | |
Note(s): This table reports the results of the two-step system GMM estimation examining the link between top executives' financial experience and effective tax rates. In Column (1), △Financial_Ratio, is defined as the change in the proportion of financially experienced executives on the TMT. In Column (2), △RegulatoryFinancial_Ratio is the change in the proportion of top executives with regulatory-oriented financial experience relative to the total number of top executives, while △NonregulatoryFinancial_Ratio captures the change in the proportion with non-regulatory financial experience. All regressions include the lagged dependent variable (LAGGED_△ETR1) and a full set of control variables, with year, industry, and province fixed effects. All independent variables are lagged by one year except for Growth and Loss. The Sargan over-identification test and the Difference-in-Hansen test confirm the validity of the instruments. ***, **, and * denote significance at the 1%, 5%, and 10% levels, respectively