CEO war trauma and corporate tax avoidance

초록

This paper investigates the impact of CEOs' traumatic experiences on corporate tax avoidance. Using CEOs who experienced the Korean War, we find that firms led by war-traumatized CEOs exhibit lower levels of tax avoidance than those led by non-traumatized CEOs. Our results are robust to controlling for managerial characteristics, such as CEO age, education, and stock ownership, and to the applications of propensity score matching, entropy balancing, and placebo tests. Analysis of CEO turnover further bolsters our main finding. We also find that the effect of CEO war trauma on tax avoidance is less pronounced for firms that belong to chaebols, have higher foreign investor ownership, and have award-winning CEOs. Overall, our results highlight the role of traumatic experiences in shaping CEOs' risk preferences, which, in turn, affect corporate tax planning.

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