Tax planning ability and the CFO's compensation

Abstract

This paper selects all A-share listed companies from 2011 to 2021 for empirical analysis and explores whether the CFO's tax planning ability affects their compensation and the mechanism behind the impact. It is found that CFOs with more vital tax planning ability will receive higher salaries; the relationship between firms' tax avoidance level and CFOs' salaries is an inverted U-shape, and reasonable and moderate tax avoidance can help to increase the value of the firms, but the value of the firms will decrease when the marginal cost of tax avoidance exceeds the marginal benefit.