A study co-authored by two Fordham University faculty members along with two other academics indicates a sharp gender difference in how chief financial officers at large companies handle risky tax-avoidance measures.
“Are Female CFOs Less Tax-Aggressive? Evidence from Tax Aggressiveness,” published in the current issue of The Journal of the American Taxation Association, found that companies with women CFOs were 17.4 percent less likely to adopt risky tax shelters than firms with male CFOs.
Risk aversion, said Fordham University Assistant Professor Meng Yan, seemed to be dominant in women.
“If you hire a female CFO versus a male CFO, in terms of the effective tax rate the company is paying, you really don’t see the difference,” said Yan. “However, if you focus on the more aggressive end of the tax strategies, it’s very clear that women would like to get away from those as much as they can.”
Along with Yan, Fordham Professor Iftekhar Hasan and Qiang Wu and Bill B. Francis of Rensselaer Polytechnic Institute carried out the study.
The aggressiveness was measured in three areas:
- Adoption of tax shelters based on a literal interpretation of regulations rather than legislative intent.
- Claims of tax benefits not yet recognized by the federal Internal Revenue Service.
- Differences between profits companies claim in public financial statements and those reported to the IRS.
Only 11 percent of CFOs of firms in the S&P 500 are women, but the differences in approach presented by the data were significant, Yan said.
“Amazingly, the results are very strong,” she added.
The study, Yan said, was simply a gender look. Not taken into consideration was whether a company with a more progressive culture (and, therefore, less likely to engage in risky tax-avoidance methods) was also more likely to hire a woman CFO.
“But I suspect that might be part of it,” Yan said.