The effect of corporate tax avoidance on stock price crash risk: Evidence from Taiwanese publicly traded firms

Abstract

Using Taiwanese publicly traded firm-year observations over the 2011–2017 period as samples I examine whether firm’s stock price crash risk is exacerbated by its tax avoidance behavior My empirical results show that stock price crash risk increases significantly with corporate tax avoidance activities My evidence is consistent with the notion that tax avoidance activities serve as masks and justifications for management to complicate transactions Resulting information asymmetry between management and investors leads to agency problems Therefore managers can extract rents under the guise of tax avoidance for extended periods which in turn results in stock price crashes when their self-benefiting behavior is ultimately brought to light

Date of Award	2020
Original language	English
Supervisor	Ping-Hsun Huang (Supervisor)