Purpose

The purpose of this paper is to examine whether the quality of management can mitigate the positive association between corporate tax avoidance and firm-specific stock price crash risk (SPCR).

Design/methodology/approach

The study is based on data from the Center for Research in Security Prices (CRSP), Compustat and ExecuComp and focuses on US-listed firms from 1980 to 2016. The authors employ ordinary least squares (OLS) regression as the baseline methodology and use five measures of tax avoidance and three measures of SPCR. Propensity score matching (PSM) and two-stage least squares methodologies are employed to address endogeneity concerns.

Findings

The authors find that more able managers weaken the positive relationship between tax avoidance and SPCR. The results suggest that the benefits of efficient tax management are more likely in firms with a more able management team as the likelihood of SPCR due to tax avoidance practices is reduced in such firms.

Practical implications

This study has important practical implications for investors who are concerned about firms that engage in tax planning activities that can reduce corporate taxes, but at the same time increase the SPCR. Considering the compelling arguments and the “dark” side of more able managers who may engage in opportunistic behaviour, the study provides useful evidence in support of more able managers.

Originality/value

This paper contributes to the SPCR literature by examining the effect of managerial ability on the likelihood of tax avoidance causing SPCR. Able managers are likely to lower the risk faced by investors and are less likely to extract rent and manipulate information. Therefore, the findings of this study have implications for investors by informing them of the negative value implications of tax avoidance and how they can be mitigated by hiring more able managers.

中文翻译：

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避税与股价崩盘风险：管理能力的缓和作用

目的

本文的目的是检验管理质量是否可以减轻公司避税与公司特定股价崩盘风险 (SPCR) 之间的正相关关系。

设计/方法/方法

该研究基于证券价格研究中心 (CRSP)、Compustat 和 ExecuComp 的数据，重点关注 1980 年至 2016 年的美国上市公司。作者采用普通最小二乘法 (OLS) 回归作为基线方法，并使用五个避税措施和 SPCR 的三项措施。倾向得分匹配 (PSM) 和两阶段最小二乘法用于解决内生性问题。

发现

作者发现，更有能力的管理者会削弱避税与 SPCR 之间的正向关系。结果表明，管理团队能力更强的公司更有可能获得有效税收管理的好处，因为此类公司因避税做法而导致 SPCR 的可能性降低。

实际影响

这项研究对那些关注公司从事税收筹划活动的投资者具有重要的实际意义，这些活动可以减少公司税，但同时增加 SPCR。考虑到令人信服的论点和可能从事机会主义行为的更有能力的经理的“黑暗”面，该研究提供了有用的证据来支持更有能力的经理。

原创性/价值

本文通过研究管理能力对导致 SPCR 的避税可能性的​​影响，为 SPCR 文献做出了贡献。有能力的管理者可能会降低投资者面临的风险，并且不太可能提取租金和操纵信息。因此，本研究的结果通过告知投资者避税的负面价值影响以及如何通过雇用更有能力的经理来减轻这些影响，从而对投资者产生影响。