Executive Personal Touch: Corporate Tax Aggressiveness after Penalty

This study investigates the firm tax aggressiveness after penalty and whether having personally tax-aggressive executives has any impact on the behavior. As penalties are a form of payment to the government and are perceived as loss, I investigate if firms try to recover it by avoiding tax (another payment to government). I use the violation and monetary penalty data in the US and find that firms tend to avoid tax after penalty but for a short period. This could be because firms do not want to deviate much or for long time from their optimal tax planning position, however, they want to recover some loss occurred due to the penalty.