Research Of The Influence Of Management Incentives On Tax Planning Behavior

Executive compensation is a common measure to relieve the principal-agent contradictions and the problems raised by two rights separation. Many studies show that executive compensation has a strong influence on the company performance. Meanwhile, tax planning behavior permeates all the corporation managing activities and plays an important role in company performance. Consequently, we believe that there exist some relationships between executive compensation and tax planning behavior.Moreover, due to our country’s special conditions, we hold the idea that the ownership of a company may affect the correlation between executive compensation and tax planning behavior. As a result, it is necessary to research the influence of each specific type of ownership.In this paper, we choose four different ways of executive compensation as our research target, including payment incentives, bonds incentives, career promotion and perks. By collecting and analyzing data from the annual report of both state-owned and non-state-owned listed companies during 2012 and 2013, we finally come to some valuable conclusions. Firstly, there is a positive correlation between monetary compensation and tax planning, the same as bonds incentives and career promotion. Secondly, the incentive effect of bonds incentives and career promotion is better than monetary compensation. Thirdly, perks are negatively correlated with tax planning behavior. Fourthly, the incentive effect of monetary compensation and bonds incentives in the non-state-owned company is better than that in the state-owned company. Last but not least, the effect of career promotion and perks in the state-owned company is stronger than that in the non-state-owned company.Based on the conclusions above, in the last part, this paper put forward some suggestions about the way listed companies can promote its performance by taking advantage of better tax planning behavior through management incentives.