경영자의 과신성향이 세무위험에 미치는 영향

This study examine the effect of managers propensity on business decisions. Specifically, we investigate the effect of managers’ overconfidence on tax uncertainty. Prior studies examined the relationship between CEOs overconfidence and tax avoidance, but found mixed results. Tax avoidance is a short term decision in tax strategy rather than long term strategy. However, CEOs propensity does not changed over time. By considering the characteristics of CEO overconfidence into the tax decision, this paper explores the effect of CEO overconfidence and tax uncertainty. According to prior studies, CEO with overconfidence is more likely to overestimate the benefits from tax avoidance. But, he(she) tends to underestimate the risk from aggressive tax strategies and non-tax cost from tax avoidance. This decision leads to unstable tax policy and results in high volatile tax costs. Therefore, firms with overconfident CEO are more likely to have higher tax uncertainty. Using the behavior on repurchase treasury stock in Korea Stock Market, this paper find that the firms with CEOs overconfidence are more likely to have greater tax uncertainty. We further examine the effect of CEOs power on this relationship. We find that CEOs share ratio positively affects the relationship between CEOs overconfidence and tax uncertainty. This finding provides the empirical evidence on tax uncertainty and implications to related studies.