The effect of board of directors’ expertise and tax avoidance on corporate debt

Lanis, R; Richardson, G; Govendir, B; Pazmandy, G

The effect of board of directors’ expertise and tax avoidance on corporate debt

Lanis, R

Richardson, G Govendir, B

Pazmandy, G

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Publisher:: Wiley
Publication Type:: Journal Article
Citation:: Accounting and Finance, 2021
Issue Date:: 2021-01-01

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Field	Value	Language
dc.contributor.author	Lanis, R https://orcid.org/0000-0002-1821-8345
dc.contributor.author	Richardson, G
dc.contributor.author	Govendir, B https://orcid.org/0000-0002-7112-0267
dc.contributor.author	Pazmandy, G https://orcid.org/0000-0001-5452-8298
dc.date.accessioned	2021-09-05T05:14:32Z
dc.date.available	2021-09-05T05:14:32Z
dc.date.issued	2021-01-01
dc.identifier.citation	Accounting and Finance, 2021
dc.identifier.issn	0810-5391
dc.identifier.issn	1467-629X
dc.identifier.uri	http://hdl.handle.net/10453/150326
dc.description.abstract	© 2020 Accounting and Finance Association of Australia and New Zealand This study examines the effect of board of directors’ expertise and tax avoidance on corporate debt. We find that there is no association between financially expert outside directors on the board and corporate debt, which is contrary to some prior research findings. However, we do find a positive association between the proportion of financially expert inside directors on the board and debt. We also find that the debt substitution effect is significantly intensified by the presence of outside directors on the board with financial expertise, which suggests that the advice offered by these directors better informs managers to make decisions about the trade-off between the benefits and costs of debt and non-debt tax shields. We find no such effect for inside directors. Overall, this study extends the literature on corporate governance, tax avoidance and corporate debt.
dc.language	English
dc.publisher	Wiley
dc.relation.ispartof	Accounting and Finance
dc.relation.isbasedon	10.1111/acfi.12738
dc.rights	info:eu-repo/semantics/embargoedAccess
dc.subject	1402 Applied Economics, 1501 Accounting, Auditing and Accountability, 1502 Banking, Finance and Investment
dc.subject.classification	Accounting
dc.title	The effect of board of directors’ expertise and tax avoidance on corporate debt
dc.type	Journal Article
utslib.for	1402 Applied Economics
utslib.for	1501 Accounting, Auditing and Accountability
utslib.for	1502 Banking, Finance and Investment
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
pubs.organisational-group	/University of Technology Sydney/Faculty of Business/Accounting Discipline
utslib.copyright.status	open_access	*
pubs.consider-herdc	true
utslib.copyright.embargo	2022-01-01T00:00:00+1000Z
dc.date.updated	2021-09-05T05:14:31Z
pubs.publication-status	Published

Abstract:

© 2020 Accounting and Finance Association of Australia and New Zealand This study examines the effect of board of directors’ expertise and tax avoidance on corporate debt. We find that there is no association between financially expert outside directors on the board and corporate debt, which is contrary to some prior research findings. However, we do find a positive association between the proportion of financially expert inside directors on the board and debt. We also find that the debt substitution effect is significantly intensified by the presence of outside directors on the board with financial expertise, which suggests that the advice offered by these directors better informs managers to make decisions about the trade-off between the benefits and costs of debt and non-debt tax shields. We find no such effect for inside directors. Overall, this study extends the literature on corporate governance, tax avoidance and corporate debt.

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http://hdl.handle.net/10453/150326