Influence of ownership structure and corporate governance on effective tax rates and tax planning: Malaysian evidence
Source: Australian Tax Forum Journal Article
Published Date: 1 Dec 2012
The effective tax rate (ETR) may be used to measure the impact of changes in a country’s tax policy on a company’s tax burden. Our study examines if the ownership structure and the firm’s corporate governance mechanisms affects the ETRs and the tax planning of Malaysian public listed companies (PLCs). Using a sample of 345 PLCs, we find that government ownership, management power, and total accruals are important determinants of companies ETRs. Additionally, the results show that companies that mitigate the agency conflicts with lower total accruals are more likely to have lower ETRs, and executive compensation is a good predictor of long-term tax planning by PLCs. Although preferential tax treatments for certain industries like tourism and manufacturing help lower ETRs, our findings suggest industry firm size is related to ETR and it is a political asset that helps to maximize the country’s wealth.
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Details
- Published By: Sakthi Mahenthiran, Jeyapalan Kasipillai
- Published On:1 Dec 2012
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