The influence of top management team and board compositions on tax avoidance: An international study
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2024-07-04
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en
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Corporate tax avoidance is increasingly viewed as socially irresponsible, reflecting society’s growing expectation for companies to be responsible and accountable for their broader impact. This study examines how the compositions of top management teams (TMTs) and boards influence tax avoidance and how these relationships are moderated by country-level governance and stakeholder orientation. Using a multilevel panel dataset of 4,734 companies across 41 countries from 2012-2022, we find that board independence is negatively associated with tax avoidance, suggesting that more independent boards discourage such practices. The study further reveals that the combination of board gender diversity and the presence of an audit committee jointly reduces tax avoidance. Excluding U.S. data, the findings suggest that higher gender diversity in TMTs might lead to increased tax avoidance, though this effect is mitigated in countries with stronger country-level governance. Our findings indicate that strong country-level governance frameworks can enhance the ethical and risk-averse tendencies of gender-diverse boards and TMTs, thereby reducing tax avoidance. Conversely, stakeholder orientation yields conflicting results: in stakeholder-oriented countries, board gender diversity is associated with higher tax avoidance, whereas TMT gender diversity leads to lower tax avoidance, suggesting a trade-off between paying taxes and contributing to other CSR activities.
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Faculteit der Managementwetenschappen