The impact of superstition on corporate tax avoidance: how do CEOs trade off risks associated with tax avoidance?
研究中国CEO本命年对企业避税的影响，发现本命年企业避税程度更高，尤其在财务约束紧、业务风险高、迷信程度高地区及非国有企业中更显著，表明CEO风险规避时更重视财务风险而非声誉和诉讼风险。
Purpose We examine how superstition shapes corporate tax avoidance and do so by taking a risk perspective and focusing on the zodiac-year belief prevalent in China. Design/methodology/approach We adopt a difference-in-differences research design to compare the degree of corporate tax avoidance in the CEOs’ zodiac year with that in the adjacent years. We do propensity-score matching to form a sample of Chinese listed firms for the regression analysis. Findings We find causal evidence that firms exhibit a greater magnitude of tax avoidance in the CEOs’ zodiac years, a result attributable to relatively weak tax enforcement in the Chinese context. We also find that the zodiac-year effect on corporate tax avoidance is more pronounced for firms with tight financial constraints, firms with high business risk, firms headquartered in regions with a high degree of superstition and non-state-owned firms. Originality/value This study is the first to show that superstition is a determinant factor of tax avoidance and contributes to the tax literature by shedding light on the behavioral risk factors that shape corporate tax avoidance. We take the perspective of CEOs’ risk appetite to analyze how tax avoidance is influenced by the CEOs’ trade-off between the costs and benefits of avoiding taxes. Our results suggest that, when CEOs are more risk-averse, they attach more importance to financial risk than the risk of reputational losses and litigation associated with corporate tax avoidance. The findings imply that tax avoidance can be curbed by increasing (or decreasing) the tax (financial) risk confronting the CEOs.