Board Gender Diversity and Tax Avoidance in Pakistan: A Comparison of Shariah Compliant and Non-Shariah Compliant Firms

Abstract

Corporate tax avoidance has merged an important regulatory issue around the globe, where the issue seems to be more severe for developing countries like Pakistan due to poor regulatory and institutional controls. Literature on the determination of corporate tax avoidance highlights the role of board gender diversity to curtail corporate tax avoidance. Considering these notions, this study investigates whether board gender diversity could improve corporate tax avoidance or not. Considering data from 231 Shariah Compliant and 33 Non-Shariah Compliant firms for six years, this study find that board gender diversity has negative influence on the corporate tax avoidance for only Shariah Compliant firm in Pakistan, whereas variables of audit committee size, and board independence had a negative but weak influence on corporate tax avoidance in Non-Shariah Compliant firms of Pakistan. This study argues that improving gender diversity in the board of Shariah Compliant firms could force these firms to lower their tax avoidance.