Associate Professor Yong Huang, a researcher of the Base,has published a paper titled "Tax-related human capital: Evidence from financial reporting aggressiveness of boards with tax officer directors in China" in China Journal of Accounting Research.

Abstract:We investigate the impact of tax-related human capital (THC) on corporate financial reporting aggressiveness. Using the presence of former or current tax officers from tax authorities on a firm’s board of directors as a proxy for THC, we find that firms with tax officer directors report their earnings more aggressively than those without such directors. This relationship remains robust across alternative measures of aggressiveness, model specifications and various methods of addressing endogeneity concerns. Moreover, the level of aggressiveness is more pronounced when tax officer directors have previously served in local tax authorities, have experience in offices overseeing the firm’s income tax affairs or have held a senior position in tax authorities, particularly when firms are subject to lenient tax enforcement policies or higher statutory tax rates. These findings support that tax officer directors contribute to firms’ aggressive reporting practices through THC. Additional analyses suggest that firms with tax officer directors exhibit lower effective tax rates and a weaker association between effective tax rates and operating cash flows. Our findings collectively demonstrate that firms with tax officer directors possess significant THC and employ aggressive strategies in both financial and tax reporting practices.

Keywords: Financial reporting aggressiveness; Tax reporting aggressiveness; Earnings management; Directors with government experience; Tax officer directors

Link: https://erj.ajcass.com/#/issue?id=122073&year=2025&issue=12

Author profile

Yong Huang, Associate Professor of Financial Management, School of Accounting, Zhongnan University of Economics and Law, PhD in Economics, Kyushu University, Japan. His research interest covers empirical corporate finance and behavioral corporate finance. Papers have been published in the Journal of Corporate Finance, International Review of Economics and Finance, International Review of Financial Analysis and Pacific-Basin Finance Journal.  He is an anonymous reviewer of journals such as Journal and Finance Research Letters, International Review of Economics and Finance, International Review of Financial Analysis, and Pacific-Basin Finance.