STEM CEOs and tax avoidance: evidence from top sustainable companies

Purpose Drawing upon the upper echelon theory, this paper aims to examine the relationship of Chief Executive Officers’ (CEOs’) educational backgrounds in science, technology, engineering and mathematics (STEM) majors and their propensity to engage in tax avoidance practices in top sustainable companies. Design/methodology/approach This research uses a quantitative approach to test the hypothesis by using data from Sustainalytics during the 2022 period. The robustness test is conducted using the Wu-Hausman test, 2SLS, and coarsened exact matching analysis, and additional analysis is conducted to explore the relationship between STEM CEOs and corporate tax avoidance. Findings The study finds that CEOs with STEM backgrounds are more likely to engage in tax avoidance practices, particularly in developed countries and companies with significant research and development expenses. This suggests that STEM CEOs prioritize innovation, which they fund through tax avoidance strategies. Originality/value This study contributes to the expanding body of tax research that acknowledges the significant influence exerted by CEOs in formulating corporate tax strategies, which has important implications for policymakers and investors.