This paper investigates whether executives who evidence a propensity for personal tax evasion (suspect executives) are associated with tax sheltering at the firm level. I adapt recent research to identify the presence of these executives and examine associations between suspect executive presence and firm-level measures of tax sheltering. The results indicate that the presence of suspect executives is positively associated with proxies for corporate tax sheltering. In addition, firm-years with suspect executive presence have significantly higher cash tax savings relative to firm-years without suspect executive presence. I also investigate the firm value implications of suspect executive presence and find that increases in tax sheltering are incrementally more valuable for firms that have suspect executives than similar increments made by firms that do not have suspect executives.

Our study examines the effect of corporate tax outcomes on forced CEO turnover. While prior research argues that firms often do not engage in tax avoidance due to reputational concerns, the empirical evidence suggesting the existence of reputational costs is scarce. In a broad sample of firms, we find evidence of a relation between the payment of low taxes and forced turnover. We also find that forced CEO turnover is more likely when the firm pays a high tax rate relative to its peers. Our results are consistent with the existence of previously unexplored individual reputational costs for not engaging in tax avoidance.

We examine the impact of unionization on firms' tax aggressiveness. We find a negative association between firms' tax aggressiveness and union power and a decrease in tax aggressiveness after labor union election wins. This relation is consistent with labor unions influencing managers' in one, or both, of two ways: (1) constraining managers' ability to invest in tax aggressiveness through increased monitoring; or (2) decreasing returns to tax aggressiveness that arise from unions' rent seeking behavior. We also find preliminary evidence that the market expects these reductions around union elections and discounts firms that likely add shareholder value via aggressive tax strategies.

We test whether firms that exclude the effects of amortization from non-GAAP earnings allocate more of an acquisition’s purchase price to definite-lived intangible assets (DLIA). This strategy can yield two potential benefits: it can (1) increase non-GAAP earnings by shifting depreciation of tangible assets, which is often included in non-GAAP earnings, to amortization of DLIA, which non-GAAP earnings exclude, and (2) decrease the likelihood of future impairments by shifting allocations from goodwill to DLIA. Consistent with expectations, we find that non-GAAP-reporting firms that exclude amortization from non-GAAP earnings allocate more of the purchase price to DLIA. We also find that these firms allocate less of the purchase price to depreciable assets and goodwill. Finally, we document earnings surprise and valuation benefits related to these allocation choices. Overall, our results provide new evidence about non-GAAP reporting and purchase price allocations and suggest that non-GAAP reporting can influence management’s GAAP accounting choices. Data Availability: All data are publicly available from sources described in the paper.