Abstract
This study aims to examine the relationship between Board of Director’s characteristics and tax aggressiveness. Taxes are considered an additional cost to the firm and its shareholders because these taxes reduce the available cash flow. Firms tend to employ different tax aggressiveness techniques. Aggressive tax planning or strategic tax behaviors are activities generally designed to reduce tax liability that includes Tax evasion, Tax evasion and legitimate saving of taxes. This study is the first in Jordan which tests the relationship between Board of Director’s characteristics (Board Duality, Board Composition and Board Independence) on tax aggressiveness. Based on a sample of 140 Jordanian firms during the period 2013-2017, this study used regression analysis to examine the effect of board composition, board independence, CEO duality, return on assets (ROA) and firm size on the tax aggressiveness. The study found that there is a negative relationship between board composition and board independence from one side, and the tax aggressiveness from the other side. Furthermore, the study found that there is a positive relationship between board duality and tax aggressiveness. Finally, both the return on assets (ROA) and the firm size variables, which were included as control variables, were found to be positively related to the tax aggressiveness.
Highlights
IntroductionIt could be argued that corporate tax acts as a corporate governance mechanism by discouraging those behaviors that are contrary to the interests of the company or the interests of the company’s stakeholders
This study examines the relationship between corporate governance characteristics and tax aggressiveness in a context of developing country
Using a study sample of 140 firms during the period 2013-2017, we run a regression model to examine the effect of board composition, board independence, CEO duality, return on assets (ROA) and firm size on the tax aggressiveness
Summary
It could be argued that corporate tax acts as a corporate governance mechanism by discouraging those behaviors that are contrary to the interests of the company or the interests of the company’s stakeholders. In addition to another set of these, issues are ways to ensure the quality of management decisions in general and transparency of decisions related to the tax area in particular. The board of directors and stakeholders must be aware of the risks of tax administration [12]
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