Board of Directors’ Characteristics and Tax Aggressiveness: Evidence from Jordanian Listed Firms - Theoretical Economics Letters

TEL > Vol.9 No.7, October 2019

Theoretical Economics Letters

Volume 9, Issue 7 (October 2019)

ISSN Print: 2162-2078 ISSN Online: 2162-2086

Google-based Impact Factor: 1.19 Citations h5-index & Ranking

Board of Directors’ Characteristics and Tax Aggressiveness: Evidence from Jordanian Listed Firms ()

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DOI: 10.4236/tel.2019.97171 1,792 Downloads 5,968 Views Citations

Author(s)

Luai Aburajab¹, Bassam Maali¹, Monther Jaradat², Malek Alsharairi¹

Affiliation(s)

¹Department of International Accounting, German Jordanian University, Amman, Jordan.
²Income and Sales Tax Department, Amman, Jordan.

ABSTRACT

This study aims to examine the relationship between Board of Director’s characteristics and tax aggressiveness. Taxes are considered an additional cost to the firm and its shareholders because these taxes reduce the available cash flow. Firms tend to employ different tax aggressiveness techniques. Aggressive tax planning or strategic tax behaviors are activities generally designed to reduce tax liability that includes Tax evasion, Tax evasion and legitimate saving of taxes. This study is the first in Jordan which tests the relationship between Board of Director’s characteristics (Board Duality, Board Composition and Board Independence) on tax aggressiveness. Based on a sample of 140 Jordanian firms during the period 2013-2017, this study used regression analysis to examine the effect of board composition, board independence, CEO duality, return on assets (ROA) and firm size on the tax aggressiveness. The study found that there is a negative relationship between board composition and board independence from one side, and the tax aggressiveness from the other side. Furthermore, the study found that there is a positive relationship between board duality and tax aggressiveness. Finally, both the return on assets (ROA) and the firm size variables, which were included as control variables, were found to be positively related to the tax aggressiveness.

KEYWORDS

Corporate Governance, Tax Aggressiveness, Board Size, Board Independence, Board Compensation

Share and Cite:

Aburajab, L. , Maali, B. , Jaradat, M. and Alsharairi, M. (2019) Board of Directors’ Characteristics and Tax Aggressiveness: Evidence from Jordanian Listed Firms. Theoretical Economics Letters, 9, 2732-2745. doi: 10.4236/tel.2019.97171.

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