CEO marital status and corporate tax planning behavior

This paper investigates the effect of the marital status of chief executive officers (CEOs) on their firms' aggressive tax planning practices. Using a sample of S & P 1500 companies from 1996 to 2018, we find that firms led by unmarried CEOs exhibit a higher level of aggressive tax planning behavior than firms led by married CEOs after controlling for firm characteristics and CEO traits. This result is robust to alternative identification strategies including propensity-score-matching design, difference-in-difference approach, and instrumental variable technique. Moreover, the attenuating impact of CEO marriage on tax planning behavior is more pronounced among firms in non-consumer-oriented industries and when CEOs have a low pay-performance sensitivity. Further analysis of with-in CEO marital status variation shows that CEOs tend to be more tax aggressive after divorce. This study enhances our understanding of the corporate finance repercussion of CEOs' personal traits and in particular of the wide variation of firms' aggressive tax planning.