The impact of corporate governance on corporate tax avoidance in Malaysia / Koay Guo Yao

Koay , Guo Yao (2022) The impact of corporate governance on corporate tax avoidance in Malaysia / Koay Guo Yao. Masters thesis, Universiti Malaya.

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Abstract

The purpose of this study is to examine the relationship between corporate governance and corporate tax avoidance in Malaysia. This study analyses a sample of 387 firm-year observations from large listed companies on Bursa Malaysia across the 2016 – 2020 period using a fixed effect panel least squares regression model. It reveals that CEO compensation has a significant positive relationship with corporate tax avoidance, which shows that higher pay could induce and motivate CEOs to engage in more tax avoidance activities for their companies. However, little evidence is documented on the impact of other corporate governance structures, including board gender diversity, on a company’s tax avoidance level. This suggests that corporate governance has limited influence on a company’s tax compliance matters in Malaysia, contrary to evidence mainly from developed countries. While this study, as with other quantitative studies, may not be able to explain the reality of the results, the authors provided rather comprehensive explanations on the findings to help with one’s understanding on the topic. This study contributes in extending the literature of tax research in Malaysia, and enriches the literature on governance and tax by providing unique evidence and insights from a developing country. To the best of the authors’ knowledge, this study is also the first to examine the effects of board gender diversity on corporate tax avoidance in Malaysia.

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