The Effect Of Executives'Identity On Corporate Tax Avoidance

Taxation is the main source of fiscal revenue for government to regulate and monitor the national economy.It is firms' obligation to pay the tax.However,this mandatory sharing of company income is against the goal of maximizing profits.Therefore,companies are pushed to make strategies of tax avoidance to reduce tax expenditures.The widespread corporate tax avoidance issue has attracted the attention of academics.In addition,according to the principal-agent theory,executives determine the behavior of tax avoidance.Therefore,the influence of executives'personal traits on corporate tax avoidance has gradually become a hot topic.Most of literatures studied the influence of traits such as gender,age,educational background and employment experience,but there are few studies on the relationship between the native place trait and behavior of tax avoidance.Traditional Chinese cult'ure attaches great importance to the appreciation for hometown,in which people have attachment and to their hometowns.This paper starts with the heterogeneous information of the native place of executives to study the influence of the hometown identity on the tax avoidance behavior of the company.Hometown identity is defined'as the consistency of native province of the executive and the registration place of the firm.On account of the principal-agent theory,upper echelons theory and identity,this paper elaborates how the hometown identity of executives affects tax avoidance,and further analyzes the impact of tax collection and management on the role of two.Then the main research hypotheses are put forward.This paper uses the data of A-share listed private enterprises f-rom 2007 to 2015 to conduct empirical research.According to the empirical analysis,the conclusions of this paper are proposed as follows:(I)There is a significant negative correlation between the hometown identity of the chairman and general manager and the tax avoidance,that is,when the executives'native province is consistent with the corporation register,the tax avoidance can be significantly reduced.(2)Strict tax enforcement can strengthen the negative correlation between hometown identity and tax avoidance.(3)Compared with female executives,male executives with hometown identity play a greater role in negative tax avoidance,(4)The suppression effect of hometown identity on corporate tax avoidance is only established in areas with high fiscal deficit rate and high degree of financial marketization.Finally,based on the research conclusions,this paper proposes policy recommendations from the perspectives of recruit of senior management,improvement of tax authorities' ability and decision-making of investors.