THE RELATIONSHIP BETWEEN CORPORATE GOVERNANCE AND TAX AVOIDANCE: EMPIRICAL EVIDENCE OF THE LISTED COMPANIES ON THE STOCK EXCHANGE OF THAILAND
Keywords:
Corporate Governance, Tax Avoidance, Effective Tax RateAbstract
Corporate tax avoidance poses a challenge to long-term economic development, underscoring the need for effective mechanisms to mitigate such behavior in the corporate sector. This study examines the relationship between corporate governance quality and tax avoidance among companies listed on the Stock Exchange of Thailand. Using secondary data covering the period from 2018 to 2024 and 635 firm-year observations, panel data analysis is employed to investigate the proposed relationships. The results indicate that corporate governance scores are positively and statistically significantly associated with the effective tax rate, suggesting that stronger governance is linked to lower levels of corporate tax avoidance. In addition, firm size shows a positive and significant relationship with the effective tax rate, consistent with the argument that larger firms are subject to more intensive regulatory oversight and stakeholder scrutiny. The findings highlight the role of effective governance mechanisms, including an appropriate proportion of independent directors, an independent and professionally competent audit committee, board gender diversity, and well structured board subcommittees, in constraining tax avoidance practices. Furthermore, the results suggest that regulators may utilize corporate governance information as a monitoring signal to promote higher governance standards and enhance risk based supervision in the capital market.
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