This study investigates whether loosened monitoring from institutional investors affects firm tax planning decisions. We take advantage of shocks to unrelated parts of institutional investors’ portfolios and examine how plausibly exogenous changes in monitoring from institutional investors influence the level of firm tax avoidance. We find that investee firms significantly increase their temporary tax avoidance when there are temporary reductions in the attention of their dedicated institutional investors. Cross-sectional tests show that the tax impact of reduced dedicated investor attention and monitoring intensity is more pronounced when a firm’s information environment is less transparent and when a firm is subject to weaker internal governance. Our findings are robust to alternative research designs.

本研究调查机构投资者放松监管是否会影响公司税务规划决策。我们利用对机构投资者投资组合中不相关部分的冲击，并研究机构投资者监控中看似合理的外生变化如何影响公司避税水平。我们发现，当其专门的机构投资者的注意力暂时减少时，被投资公司会显着增加其临时避税行为。横断面测试表明，当公司的信息环境透明度较低且公司内部治理较弱时，投资者专用注意力和监控强度降低对税收的影响更为明显。我们的研究结果对替代研究设计是稳健的。