Military experience and corporate tax avoidance

Key takeaways

• CEOs with military experience engage in less tax avoidance
• Military training instills values of duty and integrity
• These values carry over to corporate decision-making
• Veteran CEOs take more conservative tax positions
• Personal background shapes professional conduct at the highest levels

The research question

Does military service shape how executives lead companies? We examine one specific domain: tax avoidance. Tax planning involves judgment calls about how aggressively to interpret tax law. Do veteran CEOs approach these decisions differently?

What we found

CEOs with military backgrounds engage in significantly less aggressive tax planning. Their firms have higher effective tax rates and take fewer uncertain tax positions.

The military instills specific values: duty, honor, following rules. These values appear to influence how veteran CEOs view tax obligations. They are more likely to see taxes as a civic duty rather than an expense to be minimized.

Why this matters

This paper contributes to our understanding of how personal background shapes corporate behavior. CEOs are not interchangeable. Their formative experiences influence the culture and decisions of the organizations they lead.

For investors and regulators: executive background provides information about likely corporate behavior. For society: the values we instill in young people have long-lasting effects on how they lead.