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CEO hometown ties and tax avoidance‐evidence from China's listed firms
Author(s) -
Shen Yu,
Gao Di,
Bu Di,
Yan Lina,
Chen Ping
Publication year - 2019
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/acfi.12442
Subject(s) - china , corporate governance , interpersonal ties , business , government (linguistics) , politics , tax avoidance , market economy , double taxation , finance , political science , economics , law , linguistics , philosophy , mathematics , combinatorics
Abstract This study investigates the effects of CEO hometown ties on corporate tax avoidance. The results show that CEO hometown ties to local government officials have a significantly positive impact on tax avoidance for private firms in China. We also find that the hometown ties effect is more pronounced in cities with weak public governance and in cities whose municipal Party committee secretaries are promoted from the same city, whereas the effect is weak in cities whose municipal Party committee secretaries are transferred from other places. In summary, our results suggest that hometown ties as an important political resource can facilitate connected private firms to obtain more economic resources from government.