Incremental effects of tax avoidance driven by top executives with financial experience on future firm value
| Dependent variable = | MTB | MTB | Tobin's_Q | Tobin's_Q |
|---|---|---|---|---|
| (1) | (2) | (3) | (4) | |
| Financial_D | 0.246*** | 0.195*** | ||
| (5.540) | (5.885) | |||
| Financial_D × Tax_Avoidance | 0.376*** | 0.242** | ||
| (2.630) | (2.224) | |||
| Financial_Ratio | 1.120*** | 0.891*** | ||
| (4.976) | (5.451) | |||
| Financial_Ratio × Tax_Avoidance | 1.919*** | 1.361*** | ||
| (2.730) | (2.677) | |||
| Tax_Avoidance | 0.414*** | 0.410*** | 0.341*** | 0.332*** |
| (6.464) | (6.451) | (7.043) | (6.953) | |
| SOE | −0.079*** | −0.080*** | −0.061*** | −0.063*** |
| (−2.584) | (−2.632) | (−2.578) | (−2.645) | |
| Size | −0.788*** | −0.784*** | −0.551*** | −0.548*** |
| (−42.820) | (−42.936) | (−44.978) | (−45.091) | |
| Age | 0.116*** | 0.110*** | 0.352*** | 0.347*** |
| (6.701) | (6.334) | (27.887) | (27.534) | |
| Tangibility | −0.398** | −0.405** | −0.275** | −0.281** |
| (−2.328) | (−2.367) | (−2.289) | (−2.339) | |
| Lev | −0.415*** | −0.411*** | 0.981*** | 0.985*** |
| (−4.000) | (−3.960) | (13.748) | (13.800) | |
| RD | 7.606*** | 7.727*** | 6.062*** | 6.160*** |
| (7.104) | (7.231) | (7.507) | (7.643) | |
| ROA | 5.768*** | 5.744*** | 3.215*** | 3.194*** |
| (14.528) | (14.472) | (11.233) | (11.159) | |
| Growth | −0.038 | −0.039 | −0.133*** | −0.134*** |
| (−1.209) | (−1.248) | (−6.034) | (−6.068) | |
| Duality | 0.022 | 0.021 | −0.029 | −0.030 |
| (0.735) | (0.685) | (−1.344) | (−1.395) | |
| Independence | 2.104*** | 2.096*** | 1.260*** | 1.252*** |
| (9.644) | (9.620) | (7.615) | (7.577) | |
| Female | 0.220* | 0.215* | 0.119 | 0.114 |
| (1.797) | (1.753) | (1.299) | (1.246) | |
| Loss | 0.674*** | 0.671*** | 0.460*** | 0.458*** |
| (10.443) | (10.421) | (9.778) | (9.749) | |
| TotalAccruals | −1.091*** | −1.089*** | −0.652*** | −0.649*** |
| (−4.586) | (−4.575) | (−3.872) | (−3.856) | |
| TMT_Age | −0.285* | −0.259 | −0.020 | 0.000 |
| (−1.647) | (−1.492) | (−0.159) | (0.001) | |
| TMT_Foreign | 0.843*** | 0.828*** | 0.585*** | 0.574*** |
| (5.978) | (5.861) | (6.249) | (6.100) | |
| TMT_Academic | 0.541*** | 0.535*** | 0.444*** | 0.440*** |
| (5.982) | (5.904) | (6.651) | (6.568) | |
| _cons | 19.855*** | 19.714*** | 13.495*** | 13.380*** |
| (26.058) | (25.859) | (24.855) | (24.722) | |
| Year fixed effects? | Yes | Yes | Yes | Yes |
| Industry fixed effects? | Yes | Yes | Yes | Yes |
| Province fixed effects? | Yes | Yes | Yes | Yes |
| SEs. Clustered at | Firm, Year | Firm, Year | Firm, Year | Firm, Year |
| No. of obs | 17,645 | 17,645 | 17,645 | 17,645 |
| Adj. R-square | 0.472 | 0.472 | 0.382 | 0.382 |
| Dependent variable = | MTB | MTB | Tobin's_Q | Tobin's_Q |
|---|---|---|---|---|
| (1) | (2) | (3) | (4) | |
| 0.246*** | 0.195*** | |||
| (5.540) | (5.885) | |||
| 0.376*** | 0.242** | |||
| (2.630) | (2.224) | |||
| 1.120*** | 0.891*** | |||
| (4.976) | (5.451) | |||
| 1.919*** | 1.361*** | |||
| (2.730) | (2.677) | |||
| 0.414*** | 0.410*** | 0.341*** | 0.332*** | |
| (6.464) | (6.451) | (7.043) | (6.953) | |
| −0.079*** | −0.080*** | −0.061*** | −0.063*** | |
| (−2.584) | (−2.632) | (−2.578) | (−2.645) | |
| −0.788*** | −0.784*** | −0.551*** | −0.548*** | |
| (−42.820) | (−42.936) | (−44.978) | (−45.091) | |
| 0.116*** | 0.110*** | 0.352*** | 0.347*** | |
| (6.701) | (6.334) | (27.887) | (27.534) | |
| −0.398** | −0.405** | −0.275** | −0.281** | |
| (−2.328) | (−2.367) | (−2.289) | (−2.339) | |
| −0.415*** | −0.411*** | 0.981*** | 0.985*** | |
| (−4.000) | (−3.960) | (13.748) | (13.800) | |
| 7.606*** | 7.727*** | 6.062*** | 6.160*** | |
| (7.104) | (7.231) | (7.507) | (7.643) | |
| 5.768*** | 5.744*** | 3.215*** | 3.194*** | |
| (14.528) | (14.472) | (11.233) | (11.159) | |
| −0.038 | −0.039 | −0.133*** | −0.134*** | |
| (−1.209) | (−1.248) | (−6.034) | (−6.068) | |
| 0.022 | 0.021 | −0.029 | −0.030 | |
| (0.735) | (0.685) | (−1.344) | (−1.395) | |
| 2.104*** | 2.096*** | 1.260*** | 1.252*** | |
| (9.644) | (9.620) | (7.615) | (7.577) | |
| 0.220* | 0.215* | 0.119 | 0.114 | |
| (1.797) | (1.753) | (1.299) | (1.246) | |
| 0.674*** | 0.671*** | 0.460*** | 0.458*** | |
| (10.443) | (10.421) | (9.778) | (9.749) | |
| −1.091*** | −1.089*** | −0.652*** | −0.649*** | |
| (−4.586) | (−4.575) | (−3.872) | (−3.856) | |
| −0.285* | −0.259 | −0.020 | 0.000 | |
| (−1.647) | (−1.492) | (−0.159) | (0.001) | |
| 0.843*** | 0.828*** | 0.585*** | 0.574*** | |
| (5.978) | (5.861) | (6.249) | (6.100) | |
| 0.541*** | 0.535*** | 0.444*** | 0.440*** | |
| (5.982) | (5.904) | (6.651) | (6.568) | |
| 19.855*** | 19.714*** | 13.495*** | 13.380*** | |
| (26.058) | (25.859) | (24.855) | (24.722) | |
| Yes | Yes | Yes | Yes | |
| Yes | Yes | Yes | Yes | |
| Yes | Yes | Yes | Yes | |
| Firm, Year | Firm, Year | Firm, Year | Firm, Year | |
| 17,645 | 17,645 | 17,645 | 17,645 | |
| 0.472 | 0.472 | 0.382 | 0.382 |
Note(s): This table summarizes the incremental impact of corporate tax aggressiveness, facilitated by financially expert top executives, on future firm value. Models (1) and (2) use the market-to-book ratio (MTB) as the dependent variable. Models (3) and (4) employ Tobin's_Q as the outcome measure. Each model specification regresses firm performance metrics on indicators of top executive financial expertise, the measure of tax avoidance, their interaction, and a set of control variables. The tax avoidance variable (Tax_Avoidance) is constructed by multiplying the effective tax rate (ETR1) by negative one (−1), such that higher values reflect greater levels of tax aggressiveness. All independent variables are lagged by one year except for Growth and Loss. ***, **, and * denote significance at the 1%, 5%, and 10% levels, respectively