Board diversity and tax planning in the context of Malaysian listed firm

Mohd Waliuddin, Mohd Razali and Nurul Amirah, Sujak Subanderayo and Noraisyah, Abd Rahman and Josephine Yau, Tan Hwang and Dyg Haszelinna, Abg Ali (2023) Board diversity and tax planning in the context of Malaysian listed firm. International Journal of Applied Economics, Finance and Accounting, 17 (1). pp. 59-66. ISSN ISSN 2577-767X

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Abstract

A diversified board is increasingly essential for employee productivityand achievement. This study examines board diversity tax planningin Malaysian listed firms. The sample consists of 394 listed firms inBursa Malaysia from 2014 to 2016. All the independent data, such asboard gender, age, educational level, board size, board independence,and duality, are collected from annual reports. Effective tax rates(ETR), as a tax planning proxy, and control variables are collectedfrom DataStream. The regression results show that board gender hasa positive relationship with tax planning, while board independencehas a negative one. Other independent variables such as age,educational level, board size, and duality have an insignificantrelationship with tax planning. This study concludes that havingfemales on the board encourages tax planning strategy within the firmand raises awareness towards minimising tax burdens. Less taxplanning by independent directors could arise due to a lack ofsupervision and presence in deciding independent considerations intax planning. The implementation of gender diversity in firms canaffect tax management performance. For future research, this studyrecommends using actual data on tax planning expenditure that couldgive a more accurate effect of board diversity toward tax planning.

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