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Who shapes tax policy? Disentangling CEO versus CFO ability in explaining corporate tax avoidance
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Aan Marlinah 
, Nayla Luthfi Itsnani
This work is licensed under a Creative Commons Attribution 4.0 International License.
Abstract
This study examines how corporate tax avoidance in Indonesia is affected by the generalist skills of chief executive officers (CEOs) and chief financial officers (CFOs). A multidimensional General Ability Index (GAI) is used to assess executive abilities following Custódio et al. (2013). Non-financial companies listed between 2022 and 2024 on the Indonesia Stock Exchange (IDX) make up the sample. The three-year long-run effective tax rate (ETR) is used as a proxy for tax avoidance and is examined using panel data with a fixed-effects regression model. The results reveal a significant interaction effect within the CEO-CFO dyad. While CFOs with high generalist abilities are associated with more aggressive tax strategies, this tendency is attenuated when firms are led by CEOs with high generalist abilities. The interaction between the CEO and CFO functions as an internal governance mechanism that balances tax efficiency and regulatory compliance. This study extends upper echelons theory (Hambrick & Mason, 1984) by shifting the analytical focus from individual executive characteristics to CEO-CFO synergy in explaining corporate tax behavior. The findings imply that tax authorities should incorporate governance-based risk assessments, while firms may leverage CEO-CFO role alignment as a strategic tool for managing tax-related risks.
Keywords: Tax Avoidance, CEO, CFO, General Ability, Executive Characteristic
Authors’ individual contributions: Conceptualization — A.M.; Methodology — A.M. and N.L.I.; Investigation — A.M. and N.L.I.; Resources — N.L.I.; Writing — Original Draft — A.M. and N.L.I.; Writing — Review & Editing — A.M. and N.L.I.; Supervision — A.M.
Declaration of conflicting interests: The Authors declare that there is no conflict of interest.
JEL Classification: D22, G34, H26, M12
Received: 30.01.2026
Revised: 06.03.2026; 16.03.2026
Accepted: 23.03.2026
Published online: 26.03.2026
How to cite this paper: Marlinah, A., & Itsnani, N. L. (2026). Who shapes tax policy? Disentangling CEO versus CFO ability in explaining corporate tax avoidance. Corporate Board: Role, Duties and Composition, 22(1), 116–128. https://doi.org/10.22495/cbv22i1art9
