The impact of corporate tax outcomes on forced CEO turnover

Abstract

<abstract> <p>As market competition has increased in recent years, CEO turnover has become more frequent. The tax avoidance activities maximize after-tax profits. After the CEO turnover, the company's strategy needs to be repositioned. Therefore, this paper analyzes the impact of corporate tax avoidance on CEO turnover. This paper selects the Chinese A-share market from 2010 to 2019. It combines theoretical analysis and empirical research to explore the impact of corporate tax avoidance on CEO turnover and further analyzes the relationship under different ownerships. This paper finds a negative relationship between tax rates and forced CEO turnover. Listed companies with lower tax rates increase social concern, leading to public doubts and inspections by tax authorities, which further damage the company's reputation. CEO turnover is the quick and easy way to respond to public accusations. This paper also finds that state-owned enterprises (SOEs) undertake more social responsibilities than non-state-owned enterprises (non-SOEs). The main contributions of this paper are as follows: From the theoretical perspective, this paper conducts systematic research on corporate tax avoidance and CEO turnover and analyzes the relationship under different ownerships. In practice, this paper puts forward relevant policy recommendations for the long-term development of enterprises and social responsibilities.</p> </abstract>