英文摘要 |
Using publicly available D&O insurance data of the listed firms in Taiwan from 2008 to 2015, and based on three measures to capture tax avoidance activities (total book-tax difference, permanent book-tax difference and cash effective tax rate), this paper examines the relationship between directors' and officers' liability insurance (D&O insurance hereafter) and firms' tax avoidance activities. Our empirical results consistently indicate that D&O insurance is negatively associated with tax avoidance activities. In other words, D&O insurance will enhance the effectiveness of corporate governance, and prevent the management from engaging in tax avoidance activities. Moreover, we also find that D&O insurance coverage is negatively associated with firms' tax avoidance activities. However, our further tests find a positive relationship between abnormal D&O insurance coverage and tax avoidance activities, indicating that the abnormal D&O insurance coverage will induce moral hazard and lead to more aggressive tax avoidance activities. |