Corporate tax aggressiveness, outside directors, and debt policy : An empirical analysis

Research output: Journal Publications and ReviewsRGC 21 - Publication in refereed journalpeer-review

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Original languageEnglish
Pages (from-to)107-121
Journal / PublicationJournal of Corporate Finance
Online published23 Nov 2013
Publication statusPublished - Apr 2014


This study examines the influence of corporate tax aggressiveness on corporate debt policy (the debt-substitution effect) and the influence of outside directors on both debt and the debt-substitution effect. Based on a sample of 6967 firm-year observations over the 2001-2010 period, we find that tax aggressiveness is negatively correlated with debt. We also observe a negative correlation between debt and the proportion of outside directors on the board, and find that outside directors magnify the debt-substitution effect. Finally, we obtain similar results in analysis based on firms' debt issuance decisions. © 2013 Elsevier B.V.

Research Area(s)

  • Corporate governance, Corporate tax aggressiveness, Debt policy, Outside directors