<p>This study investigates the effect of CEO publicity and CEO facial masculinity on tax avoidance. To achieve our purpose, we selected non-financial firms listed on the Canadian S&amp;P/TSX Composite index spanning a 11-year period from 2012 to 2022. We measured tax avoidance by the current effective tax rate (CUETR) and the cash effective tax rate (CAETR). We used the Search Volume Index obtained from Google Trends to measure CEO publicity. Using the ImageJ software, we computed the facial width-to-height ratio as proxy of CEO facial masculinity. Data collection was derived from several sources such as annual reports, Datastream database as well as other online sources. The results found suggest that CEO with higher publicity is less likely to engage in tax avoidance strategies. However, there is no significant effect of CEO facial masculinity on corporate tax avoidance in the Canadian context. Our findings corroborate the upper echelon theory predictions and support the theoretical view that tax avoidance can be costly to CEOs with higher public attention. Indeed, by avoiding tax payments, they bear the risk of detection which potentially damages their reputation by labeling them as tax avoiders and exposes them to criticism as well as legal and regulatory risk, including tax audits and penalties by tax authorities. This study adds to the prior literature dealing with the effect of CEO attributes on tax avoidance by focusing on two specific and new CEO attributes, i.e., CEO publicity and CEO facial masculinity in the Canadian context.</p>

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The effect of CEO publicity and CEO facial masculinity on tax avoidance: evidence from Canada

  • Sameh Kobbi-Fakhfakh,
  • Molka Trigui

摘要

This study investigates the effect of CEO publicity and CEO facial masculinity on tax avoidance. To achieve our purpose, we selected non-financial firms listed on the Canadian S&P/TSX Composite index spanning a 11-year period from 2012 to 2022. We measured tax avoidance by the current effective tax rate (CUETR) and the cash effective tax rate (CAETR). We used the Search Volume Index obtained from Google Trends to measure CEO publicity. Using the ImageJ software, we computed the facial width-to-height ratio as proxy of CEO facial masculinity. Data collection was derived from several sources such as annual reports, Datastream database as well as other online sources. The results found suggest that CEO with higher publicity is less likely to engage in tax avoidance strategies. However, there is no significant effect of CEO facial masculinity on corporate tax avoidance in the Canadian context. Our findings corroborate the upper echelon theory predictions and support the theoretical view that tax avoidance can be costly to CEOs with higher public attention. Indeed, by avoiding tax payments, they bear the risk of detection which potentially damages their reputation by labeling them as tax avoiders and exposes them to criticism as well as legal and regulatory risk, including tax audits and penalties by tax authorities. This study adds to the prior literature dealing with the effect of CEO attributes on tax avoidance by focusing on two specific and new CEO attributes, i.e., CEO publicity and CEO facial masculinity in the Canadian context.