The Moderating Effect of Tax Management and Tax Planning on the Relationship Between Corporate Governance and Financial Performance

Abstract

The objective of this chapter is to examine the moderating role of tax management and tax planning in the relationship between corporate governance and financial performance. The authors based this research on a sample of 160 British companies, observed over the period 2005-2018. The estimation by the FGLS regressor was adopted to overcome the econometric problems detected. The results show that tax management and tax planning do not play a moderating role in the relationship between corporate governance and financial performance when we conduct our analysis without taking the sector effect into account. Through a sector analysis, the authors found that tax management for the technology and consumer sector (core and discretionary); moderates the relationship between corporate governance and financial performance. Furthermore, the authors found that for the industrial sector, the relationship between corporate governance and financial performance is moderated by tax management and tax planning.