Study on Corporate Political Connections and Tax Avoidance: Evidence from Taiwan Stock Market

• Main Authors: Ching-Yu Kao, 高靖渝
• Other Authors: Hung-Kung Chen
• Format: Others
• Language: zh-TW
• Published: 2018
• Online Access: http://ndltd.ncl.edu.tw/handle/hj77a8

碩士 === 淡江大學 === 財務金融學系碩士在職專班 === 106 === 　Using stocks listed on the Taiwan Stock Exchange and the Taipei Exchange during the period of 1998 through 2016, this study is aimed to investigate whether political connection of a company’s board members and management teams will affect its behavior of tax avoidance. After controlling for endogeneity problem, empirical results show that politically connected firms have significantly lower long-term cash effective tax rate than nonconnected firms, indicating companies with political connections tend to use their political resources to avoid taxes. In particular, corporate insiders with political connections will have more influential on tax avoidance than those with political connections. The impact of political connections on tax avoidance is stronger, if such political connections are built upon government officers, congressperson, or city councilmen, who were elected democratically. Overall, this study suggests that companies with higher demand on tax avoidance should hire managers or board members who own political positions before.