Investigating the Effect of Managerial Ability on Tax Avoidance and Investment Efficiency Relationship

Document Type : Research Paper

Authors

Shahid Bahonar University of Kerman

Abstract

Higher managerial ability and authority could lead to both higher efficiency for the firm and/or opportunistic behavior by manager. We are supposed to investigate the effect the managerial ability might have on tax avoidance and investment efficiency relationship. To do so we applied Demerjian et al (2012) and Richardson (2006) models to respectively proxy for manageria ability and investment efficiency. Tax avoidance is measured using cash effective tax rate (CETR). We sampled out 152 firms listed with Tehran Stock Exchange from 2009 to 2018. Contrary to our expectation, increased tax avoidance does not lead to less investment efficiency at lower levels of managerial ability. However, Benefiting from high ability managers, firms would enjoy higher investment efficiency when tax avoidance increases.
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Keywords

Main Subjects

References

 
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Financial Management Strategy
Volume 8, Issue 4 - Serial Number 31
December 2020
Pages 111-134

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History

  • Receive Date: 10 July 2019
  • Revise Date: 18 February 2020
  • Accept Date: 22 February 2020

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