CFO work experience, tax strategy diffusion and corporate tax avoidance

Purpose This study aims to investigate the influence of low-tax experienced CFOs on corporate tax avoidance. Design/methodology/approach The study uses a sample of S&P 1,500 firms from 1992 to 2017. The study uses ordinary least squares regression with fixed effects. In addition, the study uses difference-in-difference and propensity score matching analyses to mitigate endogeneity concerns. Findings Firms with CFOs who have previously worked at low-tax companies tend to engage in more tax avoidance than their counterparts. This effect is more pronounced in companies that are operational similar to the CFO’s previous employer, and in firms where the CFOs have accounting expertise. Originality/value This study sheds light on how executives’ work experience influences corporate tax avoidance, emphasizing the crucial role of diffusing tax planning strategies.