We investigate the impact of tax-related human capital(THC)on corporate financial reporting aggressiveness.Using the presence of former or current tax officers from tax authorities on a firm’s board of directors as a...We investigate the impact of tax-related human capital(THC)on corporate financial reporting aggressiveness.Using the presence of former or current tax officers from tax authorities on a firm’s board of directors as a proxy for THC,we find that firms with tax officer directors report their earnings more aggressively than those without such directors.This relationship remains robust across alternative measures of aggressiveness,model specifications and various methods of addressing endogeneity concerns.Moreover,the level of aggressiveness is more pronounced when tax officer directors have previ-ously served in local tax authorities,have experience in offices overseeing the firm’s income tax affairs or have held a senior position in tax authorities,par-ticularly when firms are subject to lenient tax enforcement policies or higher statutory tax rates.These findings support that tax officer directors contribute to firms’aggressive reporting practices through THC.Additional analyses sug-gest that firms with tax officer directors exhibit lower effective tax rates and a weaker association between effective tax rates and operating cash flows.Our findings collectively demonstrate that firms with tax officer directors possess significant THC and employ aggressive strategies in both financial and tax reporting practices.展开更多
基金supported by the National Social Science Fund of China(Grant No.23BGL112)the Fundamental Research Funds for the Central Universities at Zhongnan University of Eco-nomics and Law at Zhongnan University of Economics and Law(Grant No.2722023BY015)the Inno-vation and Talent Base for Digital Technology and Finance(B21038).For their helpful comments and suggestions,we thank Ji(George)Wu and other participants at the 35th Asian Finance Association Annual Conference.The usual disclaimer applies.
文摘We investigate the impact of tax-related human capital(THC)on corporate financial reporting aggressiveness.Using the presence of former or current tax officers from tax authorities on a firm’s board of directors as a proxy for THC,we find that firms with tax officer directors report their earnings more aggressively than those without such directors.This relationship remains robust across alternative measures of aggressiveness,model specifications and various methods of addressing endogeneity concerns.Moreover,the level of aggressiveness is more pronounced when tax officer directors have previ-ously served in local tax authorities,have experience in offices overseeing the firm’s income tax affairs or have held a senior position in tax authorities,par-ticularly when firms are subject to lenient tax enforcement policies or higher statutory tax rates.These findings support that tax officer directors contribute to firms’aggressive reporting practices through THC.Additional analyses sug-gest that firms with tax officer directors exhibit lower effective tax rates and a weaker association between effective tax rates and operating cash flows.Our findings collectively demonstrate that firms with tax officer directors possess significant THC and employ aggressive strategies in both financial and tax reporting practices.
