Abstract
This paper investigates whether female chief executive officers (CEOs) perform different level of tax avoidance behavior compared with male CEOs in China. We further examine whether female CEOs with political background/connection can transform the relation between gender and tax avoidance behavior. Using the total book-tax differences and permanent book-tax differences to measure the level of tax avoidance behavior following prior studies, we find that Chinese female CEOs perform the same level of tax avoidance behavior relative to their male counterparts. In addition, we find significant evidence that female CEOs with political background tend to conduct more tax avoidance activities relative to those female CEOs without political relation. These results are in contrast to a traditional western viewpoint that female managers have a higher risk aversion attitude.
Highlights
Traditional corporate tax avoidance research largely focuses on the influence of firms’ characteristics instead of managers’ characteristics
We further examine whether female chief executive officers (CEOs) with political background/connection can transform the relation between gender and tax avoidance behavior
We examine whether gender differences exist in tax avoidance decisions at a top managerial rank under the largest planned economy
Summary
Traditional corporate tax avoidance research largely focuses on the influence of firms’ characteristics instead of managers’ characteristics. As one of the largest transitional countries, China provides a special institutional environment in which to examine the relation among gender and political connection of CEOs and the level of firms’ tax avoidance activities. In contrast to a traditional western viewpoint suggesting female managers with higher risk aversion attitude, we find that Chinese female CEOs perform in difference on tax avoidance activities from their male counterparts. Extant research shows gender diversity in board or leadership position affect firms’ performance, investment activities, financial position and earnings quality, little evidence exists regarding the relation between woman in top managerial rank and tax avoidance behavior. From the gender-difference perspective, our results can be summarized in three words: “Vive la indifference!” These results contrast with evidence from developed countries where female managers are less risk-taking and associated with less tax avoidance activities (e.g., [11]).
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