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Audit Committee Effectiveness and Corporate Tax Avoidance: A Study of the Moderating Role of Cost Leadership and Differentiation Strategies
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Yasser Rezaei Pitenoei *   , Mohammad Gholamrezapoor , Narjes Amirniya |
| University of Guilan |
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Abstract: (699 Views) |
| Audit committees play an important role in corporate tax planning and tax risk management. On the other hand, effective audit committees, with a good understanding of the company's business strategy, oversee various issues within the company such as tax planning evaluation. Therefore, based on this argument, the present study examines the relationship between audit committee effectiveness with corporate tax avoidance and the moderating effect of business strategy according to its two criteria, cost leadership and differentiation. To measure corporate tax avoidance, three criteria including tax book difference, effective tax rate and effective cash flow tax rate, as well as two criteria of cost leadership strategy and differentiation strategy were used to measure business strategy. The research hypothesis is built on a sample of 470 firm-year listed on the Tehran Stock Exchange during the years 2013-2017 and then tested using structural equation modeling approach. After ensuring that the measurement and structural models of the research were acceptable, the findings of the study indicate that the effectiveness of the audit committee reduces corporate tax avoidance. In addition, the results show that business strategy moderates the negative relationship between audit committee effectiveness and corporate tax avoidance. So that the cost leadership strategy (defensive) affects the relationship between audit committee effectiveness and tax avoidance and exacerbates the negative relationship between them. Also, the differentiation strategy (aggressive) affects the relationship between audit committee effectiveness and tax avoidance and weakens the negative relationship between them. |
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| Keywords: Audit Committee Effectiveness, Tax Avoidance, Business Strategy, Cost Leadership Strategy, Differentiation Strategy. |
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Full-Text [PDF 914 kb]
(189 Downloads)
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Type of Study: Research |
Subject:
Auditing
Received: 2019/11/3 | Accepted: 2019/12/28 | Published: 2020/11/30
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