A Comparison of Corporate Governance and Tax Avoidance of UK and Japanese Firms

Artikel

The present study was designed to determine the relationship between corporate governance and tax avoidance in an international setting. Financial and governance data sourced from the Datastream database for a sample of Japanese and UK firms between 2012 and 2017 are used. First, we examine the direct effect of several corporate governance mechanisms on tax avoidance. Second, we divide the full sample into two groups (common law and code law legal system) to explore the relationship between law, corporate governance, and tax avoidance. We use both univariate and feasible generalized least square (FGLS) regression methods to examine our hypotheses. This study finds that the board size, independent directors, and the presence of women on boards of directors reduce the likelihood of tax avoidance. However, we find an insignificant association between ownership concentration and tax avoidance. Second, it also finds that firms in countries with higher country-level governance engage in less tax avoidance. The results also suggest that the role of corporate governance is more pronounced for firms operating in common law countries than those in code law countries. This manuscript is one of the few studies that examine the relationship between corporate governance and tax avoidance in an international setting with different legal and institutional environment. This relationship differs across the two countries. This paper clearly identifies implications for research, practice, and society. It documents that when a country implements a good system of governance, which targets improving transparency and accountability, it will lead to less corporate tax avoidance.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: Comparative Economic Research. Central and Eastern Europe ; ISSN: 2082-6737 ; Volume: 23 ; Year: 2020 ; Issue: 3 ; Pages: 111-132 ; Łódź: Łódź University Press

Classification and Topics

• Classification: Wirtschaft ; Business Taxes and Subsidies including sales and value-added (VAT) ; Tax Evasion and Avoidance ; Fiscal Policies and Behavior of Economic Agents: Firm ; State and Local Taxation, Subsidies, and Revenue ; Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill ; Corporate Finance and Governance: Government Policy and Regulation
• Subject: tax avoidance ; corporate governance ; comparative legal system ; Unternehmensbesteuerung ; Steuervermeidung ; Corporate Governance ; Board of Directors ; Rechtsordnung ; Vergleich ; Japan ; Großbritannien

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Salhi, Bassem ; Al Jabr, Jabr ; Jarboui, Anis
• Event: Veröffentlichung
• (who): Łódź University Press
• (where): Łódź
• (when): 2020

Further information

• DOI: doi:10.18778/1508-2008.23.23
• Handle: http://hdl.handle.net/10419/259244
• Last update: 10.03.2025, 11:43 AM CET