Tax avoidance and stock price crash risk: mitigating role of managerial ability

What is it about?

Tax haven operations and tax aggressiveness can be detrimental to firm value if management uses it opportunistically for personal gain. We explore whether the quality of management can mitigate the risk of firm-specific stock price crash risk (SPCR) in firms that engage in corporate tax avoidance. We find that more able managers weaken the positive relationship between tax avoidance and SPCR.

Featured Image