Review of Accounting Studies

, Volume 22, Issue 1, pp 141–184 | Cite as

Military experience and corporate tax avoidance

  • Kelvin K. F. Law
  • Lillian F. Mills


We find that managers with military experience pursue less tax avoidance than other managers and pay an estimated $1–$2 million more in corporate taxes per firm-year. These managers also undertake less aggressive tax planning strategies with smaller tax reserves and fewer tax havens. Although they leave tax money on the table, boards hiring these managers benefit from reductions in other gray areas in corporate reporting. The broad implications are as follows: for employee selection, boards can consider employees’ personal characteristics as a control mechanism when outputs are difficult to contract ex ante or measure ex post.


Tax avoidance Corporate financial reporting Military experience 

JEL Classification

H25 H26 M12 M14 M41 G30 G32 



We appreciate helpful comments from an anonymous referee, Linda Bamber, Gennaro Bernile, Vineet Bhagwat, Andrew Bird, Brian Bratten, Kimball Chapman, Shannon Chen, Nicholas Crain, Jason DeBacker, Dhammika Dharmapala, Timothy Goodspeed, John Graham, David Guenther, Ryan Hess, Danielle Higgins, Stephan Hollander, Justin Hopkins, Bobby R. Inman (Admiral, U.S. Navy, Ret.), Ross Jennings, John (Xuefeng) Jiang, William Kinney, Allison Koester, Chen Li, Russell Lundholm (editor), Edward Maydew, William Mayew, Eileen McGinnis, John McInnis, James Mills, Michelle Nessa, Laurence van Lent, Andrew Schmidt (CFEA discussant), Jeri Seidman (Münster discussant), Daniel Shaviro, Anywhere Sikochi, Laura Starks, Alan Viard, David Weber, Michael Williamson, Yachang Zeng, doctoral students at New York University, and seminar participants at Baruch College, University of Maryland, the University of Texas at Austin, Tilburg University, University of Toronto, University of Sao Paulo, Santa Clara University, University of Waterloo, Pennsylvania State University, 2013 Conference on Financial Economics and Accounting at the University of North Carolina at Chapel Hill, 4th Workshop on Current Research in Taxation at University of Münster, 2015 NYU Tax Policy Colloquium, as well as the University of Connecticut Tax Readings Group and the University of Iowa Tax Readings Group. This project was in process when Law was at Tilburg University.

Supplementary material

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Supplementary material 1 (PDF 314 kb)


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© Springer Science+Business Media New York 2016

Authors and Affiliations

  1. 1.Division of Accounting, Nanyang Business SchoolNanyang Technological UniversitySingaporeSingapore
  2. 2.The Beverly H. and William P. O’Hara Chair in Business, Department of Accounting, McCombs School of BusinessUniversity of Texas at AustinAustinUSA

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