The relationship between tax avoidance, company characteristics and corporate governance: Evidence from Greece

Abstract

The purpose of this paper is to research a possible relationship between corporate tax avoidance with corporate governance characteristics such as board independence, the type of auditing company and the concentration of ownership, and a range of selected financial indicators such as return on capital employed, liquidity, leverage, and company size. For this reason, the analysis was based on quantitative and qualitative data derived from the annual financial reports from a sample of 56 companies listed on the Athens Stock Exchange covering the period 2011 to 2015. As a measure of tax avoidance, the cash effective tax rate was used, while a linear regression model using the random effect method was estimated in order to examine the factors that affect it. The results of the study show that the cash effective tax rate has a statistically significant positive relationship with company size and a significant negative relationship with return on capital employed. All in all, the research shows that Greek large-sized companies show less tax avoidance, whereas in companies with a high return on capital employed the extent of tax avoidance is higher. There was no statistically significant impact of corporate governance variables on tax avoidance.

Ownership Concentration and Tax Aggressiveness in Listed Non-Financial Firms In Nigeria

“…On the other hand, the findings of this study is at variance with the findings of Salaudeen and Ejeh (2018) who discovered a non-significant association between ownership concentration and tax aggressiveness in a sample of non-financial firms in Nigeria. The finding also disagrees with the finding of Chytis et al (2019) who found that the cumulative percentage of shareholders with at least 5% shareholdings had an insignificant association with tax avoidance in Greek companies.…”

“…One measure is the ratio of shares held by shareholders with at least 5% shares to total outstanding shares (block holdings). This is line with Chytis et al (2019). The second measure of ownership concentration (OWNCO2) is an indicator variable where 1 is assigned if the ratio of block holdings is in excess of the mean value; otherwise 0.…”

“…Thus, the study found that ownership concentration is associated with tax aggressiveness and tend to control management to act for their interest. On the contrary, Chytis et al (2019) examined the influence of corporate governance attributes on tax avoidance in Greek companies. Using a sample of 56 companies between 2011 and 2015, the study found that the cumulative percentage of shareholders with at least 5% shareholdings has an insignificant association with tax avoidance.…”

Understanding Corporate Tax Avoidance and the Causal Factors: Some Evidence from Malaysia

“…Therefore, the larger the company, the lesser the tax avoidance activities. This finding was supported by the study of Chytis, Tasios, Georgopoulos and Hortis (2019), which was carried out in Greece. Chytis et al (2019) explored the relationship between tax avoidance and corporate governance characteristics on a sample of 280 companies listed on the Athens Stock Exchange.…”

“…This finding was supported by the study of Chytis, Tasios, Georgopoulos and Hortis (2019), which was carried out in Greece. Chytis et al (2019) explored the relationship between tax avoidance and corporate governance characteristics on a sample of 280 companies listed on the Athens Stock Exchange. Based on the linear regression analysis conducted, the study revealed that firm size negatively influenced tax avoidance for the investigated companies.…”