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Tax and Corporate Governance pp 13–30Cite as

Tax and Corporate Governance: An Economic Approach

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Part of the MPI Studies on Intellectual Property, Competition and Tax Law book series (MSIP,volume 3)

Abstract

How do the tax system and corporate governance arrangements interact? This chapter begins by reviewing an emerging literature that explores how agency problems create such interactions and provides evidence on their importance. This literature has neglected how taxation can interact with the various mechanisms that have arisen to ameliorate the corporate governance problem, such as concentrated ownership, accounting and information systems, high-powered incentives, financing choices, payout policy, and the market for corporate control. The remainder of the chapter outlines potentially fruitful areas for future research into how these mechanisms may respond to the tax system.

Keywords

  • Corporate Governance
  • Supra Note
  • Earning Management
  • Executive Compensation
  • Free Cash Flow

These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

The authors thank participants in the Symposium on Tax and Corporate Governance at the Max Planck Institute for Intellectual Property, Competition and Tax Law in Munich, and seminar participants at Harvard Law School and UCLA Law School, for helpful comments. Desai acknowledges the financial support of the Division of Research of Harvard Business School.

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Author information

Authors and Affiliations

  1. National Bureau of Economic Research’s Public Economics and Corporate Finance Programs, USA

    Mihir A. Desai (Faculty Research Fellow)

  2. University of Connecticut, USA

    Dhammika Dharmapala (Assistant Professor of Economics)

Authors
  1. Mihir A. Desai
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  2. Dhammika Dharmapala
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Editor information

Editors and Affiliations

  1. Max Planck Institute for Intellectual Property, Competition and Tax Law, Marstallplatz 1, 80539, Munich, Germany

    Professor Dr. Wolfgang Schön

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Desai, M.A., Dharmapala, D. (2008). Tax and Corporate Governance: An Economic Approach. In: Schön, W. (eds) Tax and Corporate Governance. MPI Studies on Intellectual Property, Competition and Tax Law, vol 3. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-540-77276-7_3

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