The effect of foreign institutional ownership on corporate tax avoidance: International evidence

Iftekhar Hasan, Incheol Kim, Haimeng Teng, Qiang Wu

Research output: Journal article publicationJournal articleAcademic researchpeer-review


We find that foreign institutional investors (FIIs) reduce their investee firms’ tax avoidance. We provide evidence that the effect is driven by the institutional distance between FIIs’ home countries/regions and host countries/regions. Specifically, we find that the effect is driven by the influence of FIIs from countries/regions with high-quality institutions (i.e., common law, high government effectiveness, and high regulatory quality) on investee firms located in countries/regions with low-quality institutions. Furthermore, we show that the effect is concentrated on FIIs with little experience in the investee countries/regions or FIIs with stronger monitoring incentives. Finally, we find that FIIs are more likely to vote against management if the firm has a higher level of tax avoidance.

Original languageEnglish
Article number100440
JournalJournal of International Accounting, Auditing and Taxation
Publication statusPublished - Mar 2022


  • Foreign institutional ownership
  • Institutional distance
  • Tax avoidance

ASJC Scopus subject areas

  • Accounting
  • Finance

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