Exploring the Link between Corporate Governance Characteristics and Effective Corporate Tax Rate: A Panel Data Approach on U.S. Listed Companies

Abstract

We blend the corporate governance and corporate taxation literature streams to study the association between board, abreast CEO characteristics, and effective corporate tax rate. We have tried to sweep a broad brush over a large number of different econometric techniques that are relevant to the analysis of financial data. Using a sample of 50 companies, mainly from the technology area, listed at NASDAQ and component of Dow Jones index, over the period 2000-2013, the empirical approach employs panel least squares and quantile regressions, as well as robustness checks by means of estimated generalized least squares, generalized linear model, and generalized method of moments. We find that board independence and board size have a statistically significant negative impact on effective corporate tax rate. It is also important to note that board independence Granger cause corporate taxation. Regardless of its robustness, CEO ownership reveals a mixed influence: positive for quantiles between 0.3-0.5 and negative at the 0.9 quantile. We also find a mixed relationship between CEO tenure and corporate taxtion.

The Impact of Corporate Governance Attributes on Tax Planning of listed Nigerian Conglomerate Companies

“…Therefore, this provides an evidence for rejecting the null hypothesis and concluding that there is a significant relationship between corporate governance attribute and tax panning of listed companies in the Nigeria conglomerate Industry. The findings of this study is consistent (Appolos et al, 2016;Păunescu et al, 2016) among others.…”

“…There is still a considerable debate over whether corporate governance attributes can influence corporate tax planning. For instance, in the United State Păunescu, Vintilă and Gherghina, (2016), explored the relationship between corporate governance characteristics and effective tax rate of the US listed firms. Using a sample of 50 companies, mainly from the technology area, listed on NASDAQ over the period 2000-2013 and panel data regression.…”

“…They concluded that based on cost and benefit of tax avoidance that family, foreign and government ownership are associated with corporate tax avoidance among Malaysian listed companies. Prior studies investigated the effects of various firm-specific characteristics on tax planning (Annuar et al, 2014;Appolos, Kwarbai, & Ogundajo, 2016;Ogundajo & Onakoya, 2016;Păunescu et al, 2016). However, the literature provides insufficient evidence on whether corporate governance attributes affects tax planning.…”

Impact of Corporate Governance Attributes on Tax Planning of listed Manufacturing Companies: A Comparative Study between Nigeria and Malaysia

“…Prior studies have investigated the effects of various firm-specific characteristics on tax planning (Annuar et al, 2014;Appolos, Kwarbai, & Ogundajo, 2016;Ogundajo & Onakoya, 2016;Păunescu et al, 2016).However, the literature provides insufficient evidence on whether corporate governance attributes affects tax planning. An important aspect of corporate governance that may influence tax planning is top management financial expert.…”

“…Their study also finds that companies with higher return on assets face lower ETRs. Păunescu et al, (2016) explored the relationship between corporate governance characteristics and effective tax rate of US listed companies. Using a sample of 50 companies, mainly from the technology area, listed at NASDAQ over the period 2000-2013 and panel data regression, as well as robustness checks by means of estimated generalized least squares and generalized method of moments.…”