Hometown Identity Of Top Executives And Corporate Tax Aggressiveness

In the past few decades,China has developed rapidly in the absence of a sound economic and legal system.This phenomenon is known as the "mystery of China's economic growth".After a lot of research on this phenomenon by academic circles,the widely accepted explanation is that in China,the informal system effectively replaces the formal system and makes up for the shortcomings of the formal system.Influenced by traditional culture,China has a strong family culture.Hometown has a great influence on one's thought and behavior,and occupies a special position in people's hearts.It makes people naturally attach to their hometown.This emotional connection is called "Hometown Identity".With the increasing research on the heterogeneity of senior managers,this paper attempts to explore whether the,hometown identity" of top executives will affect corporate tax aggressiveness.Because the top management who identify with their hometown has special feelings for their hometown,they will pay more attention to the reputation damage caused to the company and themselves of punishment by the tax authorities,and consider more the negative impact on their hometown.They will choose to reduce the tax aggressiveness of the enterprise.In order to prove that senior managers' hometown identity can inhibit corporate tax avoidance,this paper uses the data of Chinese listed companies to empirically examine the impact of senior managers' hometown identity on corporate tax avoidance.The results show that when the location of the executive company is consistent with its hometown,it will reduce the corporate tax aggressiveness.After replacing the radical tax indicators,replacing the sample of senior managers and changing the measuring method of hometown identity indicators,the results are still relatively robust.Meanwhile,I control the fixed effect at the firm level and use the DID model to solve the endogenous problems to explore that the reduction of enterprise tax aggressiveness is directly affected by managers'hometown identity.Further analysis shows that the city size of listed companies will affect the toP executives' hometown identity.Under different city sizes,the senior managers'hometown identity has different impact on corporate tax decision-making.The senior managers' hometown identity in small cities is stronger,and the degree of reducing enterprise tax aggressiveness is higher.Secondly,considering the impact of government financial pressure,if the deficit of listed companies is serious,executives with hometown identity will be less tax aggressive.Based on the theories of new institutional economics and humanistic geography,this paper analyses how hometown identity affects the tax aggressiveness of a company from the perspective of top executives' hometown identity,and further enriches and expands the cross-disciplinary research of psychology and finance.And this paper provides a new perspective for the study of enterprise tax decision-making.Most of the previous studies on enterprise tax avoidance are concerned about formal systems such as enterprise rules and policies,and objective indicators such as company performance.From the perspective of the informal institution of top executives' hometown identity,this paper pays more attention to the role of human beings,which is more closely related to reality.