Equity Incentives Of Executive And Company Tax Aggressiveness

As to the companies,tax aggressive is just like a two-edged sword,because it may put the companies into great uncertainty.The relationship between the executive behavior and the tax aggressive has become the focus of theoretical and practical circles for a long time. Considering that the tax aggressive must put in a lot of time and effort and take some risk,there is no motivation for executives to lower the tax expense in the absence of incentives.The equity incentives alleviate the agency problem to some extent,but it probably will make the executives choose the tax planning of high risk to maximize their own interests,and then the tax expense increases.This paper discussed the relationship between equity incentive and tax planning based on the data of Shenzhen and Shanghai A-share listed companies from 2007 to 2013 and classified these companies into two groups according to the nature of property.We found that the executives are more likely to take aggressive tax planning after the companies carry out the equity incentive plans.The more the executives get the equity incentive,the more they are likely to use tax aggressive.such phenomenon is more remarkable in state-owned companies.This conclusion provides some reference to the effectiveness of equity incentive and the tax reform of our country.