EXPLORING THE FACTORS THAT AFFECT IN THE LEVEL OF TAX AVOIDANCE: EMPIRICAL STUDY ON THE 150 FTSE NON-FINANCIAL COMPANIES

Abstract

This study examined the effect of corporate governance on the level of tax avoidance activities within the context of the UK. The data were collected from 489 observations from the 150 FTSE non-financial companies between 2013 and 2017. The findings indicate that the association between board independence, Board size, and CEO tenure on the one hand and Effective Tax Rate (ETR) was insignificant. However, CEO duality was significantly associated with ETR. There are a number of limitations in this study. As such there was a challenge to the availability of adequate data; moreover, obtaining additional data related to more independent variables (i.e. CEO compensation) was not possible. Moreover, this study considered ETR as a way to measure and deal with tax avoidance; yet, it should be noticed that concept of Book Tax Difference can be considered as well. Despite this research has benefited from the use of both of these two measures; however, the missing data were an issue that prevented us from exploring this option.