The moderating role of board gender diversity between power-based corporate governance and tax aggressiveness

Yahya, Farzan; Manan, Abdul; Khan, Muhammad Wasim; Hashmi, Muhammad Sadiq

doi:10.17811/ebl.10.2.2021.104-147

Cited by 11 publications

(9 citation statements)

References 33 publications

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“…This finding is consistent with the agency theoretical frameworks. Agency theory postulates that female directors may act as a mechanism of supervision and control of a board’s activity (Riguen et al , 2020; Herawati et al , 2021; Jarboui et al , 2020), resulting in better decisions in terms of reducing agency problems (Lanis et al , 2020; Yahya et al , 2021). Consequently, women's participation will help reduce corporate tax avoidance.…”

Section: Resultsmentioning

confidence: 99%

“…This theory postulates that the presence of women on the board of directors is more effective and resilient in monitoring decision-making (Jarboui et al , 2020). Gender diversity can improve managerial monitoring, resulting in better decisions in terms of reducing agency problems (Lanis et al , 2020; Yahya et al , 2021). The presence of women on corporate boards can contain the selfish and opportunistic behaviors of managers and uncover their false intentions such as avoiding paying tax to maximize shareholders’ interest (Hoseini et al , 2019).…”

Section: Theoretical Frameworkmentioning

confidence: 99%

“…Proponents of agency theory consider women to be more able to mitigate agency problems as they provide more diverse perspectives on paying more attention to the expectations of stakeholders and can allocate firm resources more effectively and efficiently (Handayani and Panjaitan, 2019). They also see BGD as a key mechanism of corporate governance that exercise effective monitoring of management decisions related to tax avoidance (Yahya et al , 2021). Because they are risk-averse, women are likely to be more careful in making decisions, including in tax planning (Yuyetta and Winasis, 2017).…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

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Do women on corporate boardrooms have an impact on tax avoidance? The mediating role of corporate social responsibility

Dakhli

2021

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Purpose The purpose of this paper is to investigate the direct and indirect relationship between board gender diversity and corporate tax avoidance using corporate social responsibility (CSR) as a mediating variable. Design/methodology/approach This study uses a panel dataset of 200 French firms listed during 2007–2018 period. The direct and indirect effects between board gender diversity (BGD) and tax avoidance were tested by using structural equation model analysis. Findings The results indicate that the presence of women on corporate boardrooms negatively affects tax avoidance. The greater the proportion of women in boards, the lower the likelihood of tax avoidance practice. In the mediation test, CSR appears to partially mediate the link between women on boards and corporate tax avoidance. Additional analysis shows that the social dimension of CSR produces this mediating effect. Practical implications The results have practical implications for companies in regulating the composition of their boards. To benefit from diversity, firms have to increase women‘s percentage in their boards of directors. Also, investors are encouraged to pay attention to the percentage of female directors when investing and purchasing shares. Social implications This study proved empirically that the higher proportion of female directors significantly reduces the possibility of tax avoidance either directly or indirectly through enhancing CSR performance. The findings show that firms with gender diversified boards are more likely to get involved in CSR for hedging against the potential consequences of aggressive tax avoidance practices. In light of the above results, firms are well-advised to strongly apply the policy encouraging or mandating women as board members to take advantage of their expected benefits. Originality/value The originality of this paper consists in proposing the establishment of both direct and indirect relationships between BGD and corporate tax avoidance through CSR. Unlike prior studies that have been examining the direct relationship between corporate governance mechanisms and corporate tax avoidance, this study went further to investigate the indirect relationship between these two constructs. This study also differs from prior studies as it examines the effect of BGD on each of constituting pillars of CSR, namely, environmental, social and governance. To date, an extensive part of CSR research has used the combined score of CSR, but the effects on different CSR pillars remain little investigated.

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Section: Resultsmentioning

confidence: 99%

Section: Theoretical Frameworkmentioning

confidence: 99%

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

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Do women on corporate boardrooms have an impact on tax avoidance? The mediating role of corporate social responsibility

Dakhli

2021

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“…La Porta et al (2000) claimed that ownership concentration is linked to weak investor protection, as agency conflicts are more complex in these firms. Specifically, besides the traditional perspective of agency problems between ownership and management, agency conflicts between majority and minority shareholders also occur in these firms (Sorensen and Miller, 2017; Yahya et al , 2021). This peculiarity makes Italy the ideal context to study TA from an agency perspective.…”

Section: Introductionmentioning

confidence: 99%

The role of corporate board and auditors in tax planning: evidence from Italy

Iazzi

Vacca

Maizza

et al. 2022

MRR

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Purpose The purpose of this paper is to investigate the effects of corporate governance mechanisms, namely, board of directors and auditors, on tax aggressiveness in Italian companies listed on the Milan Stock Exchange. Design/methodology/approach This study used a population of 168 Italian non-financial firms listed on the Milan Stock Exchange, holding shares in at least one foreign subsidiary in countries other than Italy in fiscal year 2018. Data on corporate boards and auditors were collected through the evaluation of companies’ annual reports over the period 2011–2018. Five panel data analyses with fixed effects were performed for each tax aggressiveness index, yielding 1,176 observations to test the research hypothesis. Findings This paper finds that corporate board characteristics, such as size, gender diversity and CEO duality, and auditors’ features, such as external audit quality, increase corporate tax aggressiveness. Practical implications This study provides investors with an understanding of corporate boards’ and auditors’ roles in preventing agency conflicts and evaluating a company’s tax approach. Furthermore, the findings are useful for international political bodies in regulating corporate board composition and managerial monitoring. Originality/value Almost all studies focusing primarily on corporate governance mechanisms’ effects on tax aggressiveness are within the US context. Empirical evidence on the topic in the European contexts is limited. The legislative discrepancy between countries is reflected in the computation of indices measuring tax aggressiveness, affecting US studies' generalizability across nations. This paper extends the literature on the topic by investigating other unexplored corporate governance mechanisms. Five indices were used to measure corporate tax aggressiveness and to assess analysis reliability and data robustness. Moreover, to the best of the authors’ knowledge, this study is the first attempt to investigate the link between corporate governance mechanisms and tax aggressiveness in Italy.

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“…Agency and managerial power theorists argue that CEOs may expropriate shareholders' resources for their private benefit, thereby, being detrimental to firm value (Sheikh, 2019). They override board decisions and gain more opportunities to extract rents at the expense of the firm's wealth (Van Essen et al, 2015;Yahya, Manan, et al, 2021). Especially, when earnings quality and corporate governance are weak, powerful CEOs take excessive risk leading the firm to distress (Altunbaş et al, 2020).…”

Section: Introductionmentioning

confidence: 99%

The Asymmetric Effect of CEO Power on Energy Firms’ Strategic Decisions

Yahya¹,

Khan²

2024

Asian Economics Letters

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This study investigates the effect of CEO power on energy firms’ performance, riskiness, and working capital. Our panel quantile regression estimates based on Pakistan data suggest a positive effect of CEO power on firm performance in lower and middle quantiles. Powerful CEOs mitigate excessive risk-taking when the riskiness of firms reaches certain levels. CEO power is negatively related to working capital when the cash holdings exceed a certain level.

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The moderating role of board gender diversity between power-based corporate governance and tax aggressiveness

Cited by 11 publications

References 33 publications

Do women on corporate boardrooms have an impact on tax avoidance? The mediating role of corporate social responsibility

Do women on corporate boardrooms have an impact on tax avoidance? The mediating role of corporate social responsibility

The role of corporate board and auditors in tax planning: evidence from Italy

The Asymmetric Effect of CEO Power on Energy Firms’ Strategic Decisions

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