The Investigation of the Relationship between Corporate Governance and Corporate Tax Planning

Abstract

The purpose of this study was to investigate the role of corporate governance in corporate tax planning.The features of the used corporate governance include the size of board of directors, the size of off duty board, the stability of the position of CEO and financial specialty of the board. Tax planning is measured by GAAP and cash ETR (Effective Tax Rate).In order to test the research hypotheses, financial information of 54 firms from 2009 to 2013 was used and multiple regression analysis was employed as the statistics method. The results show that corporate planning mostly exists in the firms with fewer board members. In addition, the more off duty board members in a firm and the more stable the position of the CEO, the more corporate tax planning. The findings of the research do not show a clear effect of the financial specialty of the board on tax planning. The findings, however, indicate that the firms with higher ROA have more tax planning but financiall everage has no effect on tax planning. The effect of firm size on tax planning is not clear either.

Keywords

• Corporate Governance
• Tax planning
• board of directors
• Effective Tax Rate (ETR)