Chartered Accountant CEOs and Tax Avoidance: Does it Matter?

The seminar series is also expected to promote interdisciplinary research that links the work of member of the centre with others both within the university and with external institutions.

Keywords for this seminar:

• Tax Avoidance
• Shareholder value
• Chartered Accountants
• Effective Tax Rates
• Tax Knowledge
• Tax Expertise

Seminar abstract

This research paper aims to investigate the impact of CA-qualified CEOs on firms' tax payment behaviour within a context where these CEOs are encouraged to avoid taxes.

This relationship is investigated using a data sample that consists of the 80 largest firms as measured by market capitalisation on the Johannesburg Stock Exchange. The data sample covers the periods 2005 to 2014 and has been obtained from Bloomberg.

The study utilises the following statistical methods:

• Pearson correlation analysis
• pooled ordinary least square regressions analysis
• fixed effects regression analysis
• and a preferred measure test

Overall, the study finds statistically inconclusive evidence of any relationship between a CA-qualified CEO and a firm's tax payment behaviour. However, thise is some evidence that a firm with a CA-qualified CEO, in fact, pays more tax.

Our findings are in contrast to current anecdotal evidence in South Africa that firms with CA-qualified CEOs pay less tax. Reducing tax avoidance has many positive social benefits.

The research limitations/ implications of this study are that the statistical test performed lacked power due to limited instances of turnovers between CA-qualified CEOs and non-CA CEOs.

This research adds to the prior literature on the influence of accountants in organisations by making use of an abnormal feature of the South African market: the high number of QA-qualified CEOs.

Furthermore, the paper adds to the knowledge about tax avoidance and how CEO characteristics influence corporate culture that influences avoidance behaviour.

Booking

This is a free event. Please feel free to bring your colleagues, classmates and friends along.

Speaker bio

Phillip de Jager (PhD, CA(SA)) is an Associate Professor in the Department of Finance and Tax at the University of Cape Town. Previous to his role as an academic he worked as a banker with emphasis on new businesses and sourcing new clients.

His research interests include bank capital and corporate finance.

Phillip is the Associate Editor of the Journal of Accounting in Emerging Economics and Meditari Accountancy Research Journal as well as the South African Journal of Accounting Research.