臺大管理論叢 NTU Management Review VOL.29 NO.2

The Relationship between Board Interlocks and Corporate Tax Avoidance 222 Firms can use many different types of social network ties to influence corporate tax avoidance. Gulati and Westphal (1999) posit that indirect ties can amplify the effect of direct ties. McGuire, Omer, and Wang (2012) indicate that auditors may possess superior knowledge of available tax-planning opportunities. Firms having network ties to low-tax firms engaging the same individual auditor is likely to be more influential, because auditors bring expertise and legitimacy to the interlock relationship, and thus, facilitate the transfer of knowledge on tax avoidance (Brown and Drake, 2014). In a robustness test, this study additionally examines the influence of network ties formed by directors with accounting or financial expertise, ties formed by independent directors, and ties to low-tax firms in the same industry on the diffusion of tax avoidance. 2. Design/Methodology/Approach We employ listed firms in Taiwan from 2010 to 2013 as the research sample. All the director structure data and relevant financial data used in this study are obtained from the Taiwan Economic Journal database. After the sample selection process, the final sample of this study contains 5,821 firm-year observations. To test the hypotheses of this study, we establish the following regression models: . (1) . (2) Following prior studies (Khurana and Moser, 2013; Chen, Chen, Cheng, and Shevlin, 2010), this study uses the permanent book-tax difference ( PBTD ) and cash effective tax rate ( CETR ) to capture all possible corporate tax avoidance behaviors. High and low PBTD values for a given year indicate that a firm engages in more and fewer tax avoidance activities, respectively. According to the calculation of Khurana and Moser (2013), PBTD is defined as the book-tax difference ( BTD ) minus the temporary book-tax difference ( TBTD ), where BTD is calculated as pretax book income minus taxable income, and TBTD is measured by dividing the deferred income tax expense by the corporate income tax rate in Taiwan.