The Impact of Tax Avoidance on Board Characteristics: An Empirical AnalysisTools Liu, Yutong (2020) The Impact of Tax Avoidance on Board Characteristics: An Empirical Analysis. [Dissertation (University of Nottingham only)]
AbstractThe board characteristics are regarded as one of the aspects of corporate governance, which might affect corporate strategies and decision-making process. Therefore, the board characteristics might be viewed as important determinants of corporate tax avoidance. The board characteristics include board size, board composition, and directors' educational background, and so on. The purpose of this paper is to understand the influence of board independence and board size on corporate tax avoidance in UK companies. This study selects the financial data of 98 UK companies from 2015 to 2019 including 490 firm-year observations as the sample data, after excluding the companies whose financial data was unavailable. The data were analysed by using Stata economic software and the research hypothesis was tested by using the random effects regression model. The result of this paper indicates that the companies with a larger board might have a higher frequency of corporate tax avoidance activities, which supports the former conclusion. Besides, the number of independent directors on board also has a causal but non-linear association with corporate tax avoidance. These findings suggest that the corporate board characteristics have a stronger relationship with the level of corporate tax avoidance. This study is one of the rare studies to study the relationship between the characteristics of company directors and tax avoidance by taking British companies as sample companies. Hence, it not only extends the current literature regarding the determinants of tax avoidance in developed countries, but also provide the practical implications for shareholders, investors, and capital market regulators to help them make informed decisions.
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