Females in Governance and Corporate Tax Avoidance: The Moderating Effect of Accounting Conservatism

Abstract

High cash outflow in the form of corporate taxes reduces the corporate firms’ liquidity, available funds for re-investment and growth opportunities. Corporate firms’ attention is therefore geared towards ensuring minimum tax liability. The purpose of this study is to examine the effect of females’ presence in the governance on corporate tax avoidance, moderating for the role of accounting conservatism. The study is based on the companies listed on the Nigerian Stock Exchange and utilised the ex-post factor research design. The panel corrected standard regressions was employed to test the hypothesis. Female CEO, percentage of female directors and presence of female in the audit committee have significant positive effects on tax avoidance. The moderating for accounting conservatism, the percentage of female directors on the board and female director presence in the audit committee remains significant. The findings may be of interest to the academic researchers, investors and regulators. For academic researchers, it is interested in discovering whether females’ presence in the governance affect tax avoidance and the moderating role accounting conservatism. For investors, it shows that women in the boardroom can improve the bottom line financial performance through tax reduction strategies.This study extends the existing literature by examining the mediating role of accounting conservatism on the relationship between females in governance and tax avoidance in the Nigerian context.

Corporate Governance Mechanism and Accounting Conservation of Listed Manufacturing Companies in Nigeria

“…This result is consistent with findings by Christain, et al (2022), Phapho et al (2020), andMohammed et al (2019) who argued that in a large board, management decisions are subject to greater level of inspection from more directors with greater diversity in expertise and thus enhancing conservative reporting. However, there were other empirical works with contrary findings (Chatterjee & Chanchal, 2021;Saeed, 2020;Nasr & Ntim, 2018, Onyedokun & Salisu, 2018, Suleiman, 2014Jarboui, 2013). In their different investigations of the effect of the components of corporate governance mechanism on accounting conservatism, they were unanimous in reporting the existence of negative reporting a negative causal link between board size and conservative reporting, arguing that an increase in board size may create agency problems as some directors may tag along as free riders and the large size may become too cumbersome for the CEO to manage.…”

“…Consistent with the findings of this study. Christian, et al (2020), Phapho et al (2020), El-habashy (2019), Mohammed et al (2019), Nasr and Ntim (2018), Suleiman (2014), Salami (2014 and Jarboui (2013) all reported that board independence has positive and significant trade-off with conservative reporting. Inconsistent with the findings from the evidence provided in the present work, Suleiman et al (2020) used accounting quality as a proxy for accounting conservatism and found a negative and insignificant causal link between them.…”

The Role Of Women Chief Executive Officers On Tax Avoidance Decisions In Islamic Stock Index

“…Following this line of research, recent studies provide evidence that executives face different consequences for adopting different taxation strategies. Suleiman (2020) shows that CEOs and directors are rewarded by increasing the number of outside boards of directors for being tax-aggressive. Through CEO characteristics, management can observe the costs and benefits of implementing such tax strategies, understand that they are ultimately accountable to shareholders, and embrace maximizing shareholder wealth, therefore being aggressive in tax avoidance.…”

“…They found that women CEOs have lower debt ratios, more stable company profits, and a higher chance of surviving than male CEOs in similar companies. On the other hand, a low debt level indicates a company's underinvestment so that it can reduce the company's value in the future (Suleiman 2020;Kountur, Djohanputro, and Sari 2021). Even low debt will improve earnings management (Amelia and Mulya 2022).…”

Upaya praktik Good Corporate Governance dalam penghindaran pajak di Indonesia

“…Dengan adanya hasil penelitian tersebut maka hipotesis pertama (H1) ditolak. Hasil penelitian ini berbeda dengan beberapa peneliti lain seperti Rahimipour (2017), Rhee et al, (2020), Riguen et al, (2019), Sudirjo (2020) dan Suleiman (2020) Pengaruh signifikan negatif komite audit terhadap penghindaran pajak dalam penelitian ini dapat diterima. Hasil uji hipotesis menunjukkan nilai 0.0281 dengan nilai koefisien -0.0131 yang berarti menyatakan adanya hubungan yang signifikan negatif antara komite audit dengan penghindaran pajak.…”