Top Executives’ Overseas Background And Corporate Tax Evasion

The decision on company’s tax avoidance is made by top managers.Different executives’ characteristics will lead to different companies’ tax avoidance.As China’s economy attracts more and more overseas talents to return home,the concept of"returnees" gradually enters people’s view.So will this particular executive’s characteristic affect the company’s tax avoidance policy?If so,how does their overseas background affect tax avoidance?By studying the influence of overseas background on corporate tax avoidance with its mechanism of action,it can help to introduce some overseas talents and to provide some guidance value for improving the management mechanism of top managers in listed companies from the angle of tax avoidance.Based on the overseas background of corporate executives,this paper conducts empirical research on Chinese A-share listed companies from 2008 to 2014,the empirical study found that:(1)The overseas background of top managers does increase the company’s tax avoidance behavior.(2)From the tax avoidance motivation angle,risk appetite and top managers’ status in company are partial mechanism between overseas background and company’s tax avoidance behavior.From the tax avoidance ability angle,tax avoidance knowledge and overseas tax avoidance resources are partial mechanism between overseas background and company’s tax avoidance behavior.Based on this,the further analysis of this paper finds that top managers’ gender,age and corporate governance variables will play an adjusting role in corporate tax evasion and overseas background.In addition,this paper finds the executive’s overseas background can significantly improve the company’s value.Finally,by dividing the overseas background type of top managers,we found that only the background of overseas work has a significant role in tax avoidance.By analyzing the motivation of tax avoidance and tax avoidance ability,this paper studies how executives’ overseas background affects tax avoidance of companies and it enriches the research on top echelon theory,and has some practical guidance values.In practice,on the one hand,it helps guide the government that will continue to strengthen the incentive mechanism for repatriation of outstanding overseas talents so as to enhance the important role of returnees in the economic restructuring and transformation.On the other hand,it reminds the company that it needs to strengthen corporate governance,ease the problem of principal-agent and optimize its own top manager team so that they can avoid making too many radical decisions and continue to seize opportunities and enhance value for the company.