Research
Research Interests
Corporate taxation
Multinationals' profit shifting
Empirical corporate governance
Corporate Social Responsibility
International financial integration
Papers Submitted in refereed journals
CFO Work Experience and Tax Avoidance: Evidence from China (with P. Kazakis and T. Xu)
Under revise and resubmit
We ask whether the general managerial skills that Chief Financial Officers (CFOs) gain from lifetime work experience affect corporate tax avoidance. We use a sample of hand-collected data for Chinese-listed companies to develop and validate a new CFO managerial skills index based on four dimensions of CFO work experience: (1) the number of current positions a CFO holds, (2) the number of functional departments a CFO has worked in, (3) the number of firms the CFO has worked for, and (4) whether the CFO has political connections. This index, including a subcomponent for political connections, is particularly appropriate when studying emerging economies that tend to be “relationship-based” rather than “market-based.” We find that CFOs with high general managerial skills are more likely to engage in aggressive tax avoidance. This effect is weaker among CFOs who are approaching retirement, are in their first year of employment, or are too busy. Our findings are robust to the inclusion of a comprehensive list of relevant control variables, tackling endogeneity concerns, and a battery of other sensitivity tests.
Overconfident CEOs, Corporate Social Responsibility & Tax Avoidance: Evidence from China (with P. Kazakis, and T. Xu)
CEO overconfidence is a significant factor in corporate decisions. We investigate whether CEO overconfidence affects the relationship between corporate social responsibility (CSR) and tax avoidance using a dataset of Chinese listed companies. We find that firms with higher CSR scores avoid paying more taxes. This relationship is moderated, however, by CEO overconfidence. While firms with higher CSR scores avoid more taxes on average, those led by overconfident CEOs avoid less. We contend that overconfident CEOs are less likely to use CSR strategically to mitigate risk. Our conclusion stands up to a battery of sensitivity tests, including the use of CSR sub-dimensions.
Submitted
Working papers
Tax regimes and profit shifting (with P. Kazakis, R. Soni, T. Sougiannis) (Coming soon)
We examine whether and how the imputation and non-imputation tax regimes affect the profit shifting behavior of multinational enterprises (MNEs). Unlike prior related studies, we consider not only the tax regime of the parent but also the tax regimes of its subsidiaries. We find that MNEs whose parent companies are in countries under an imputation tax regime (system), shift on average less taxable income to subsidiaries in low tax jurisdictions. This profit-shifting reduction comes via reductions in transfer pricing and in the relocation of intangibles. When we differentiate subsidiaries between those who are under an imputation tax system and those who are not, we find that MNEs exhibit a strong and consistent preference in sending more taxable income to low-tax subsidiaries under an imputation tax system than to low-tax subsidiaries under a non-imputation tax system. In this way, an MNE benefits twice: (i) from tax rate differences, and (ii) from receiving tax credits. The latter benefit is higher when the low tax subsidiary is under an imputation tax system, while the parent is not. The dominant channel that MNEs use to shift higher income to low-tax subsidiaries under an imputation tax system is debt shifting.
Media coverage:
Kathimerini newspaper (in Greeks): "Corporate tax-credit regimes and MNE's taxation"
E-government and corporate tax planning: International evidence (with C. Beuselinck, P. Kazakis and N. Mouna) (coming soon)
This study examines the impact of e-government advancement on corporate tax planning activities. We define e-government as the readiness and capacity of national institutions to use information and communications technologies to deliver public services. Using over 93,000 worldwide firm-level data from 12,200 unique firms in 94 countries over the period 2008 to 2021, we find that a country’s e-government advancement is negatively associated with the overall firms’ tax avoidance. This effect is more pronounced for firms with foreign operations and in countries with a high Online Service Index (OSI). Further cross-sectional analysis shows that the negative effect of e-government on corporate tax avoidance is attenuated in markets with low degree of competition and is more potent in low- and middle-income countries. Our main findings remain robust after we conduct an instrumental variables approach and a variety of robustness tests. Collectively, our results are consistent with higher e-government investments reducing corporate tax avoidance activities.