an observed relationship between top management’s incentives and measures of tax
planning may be an indirect outcome of the investment decision rather than from deliberate tax planning. To understand
the link between performance measures and observed tax attributes, it is necessary to explicitly consider the incentive
compensation of the tax director, who is the executive charged with overseeing the firm’s tax function. However, an
alternative scenario is that all tax planning decisions are merely dictated by top management to the tax director, who has
no ability to independently affect firm behavior. If tax planning is a role merely encompassed in top management’s duties,
then we might not observe an association between tax director incentives and measures of tax planning after controlling
for the incentives of top management.