Authors: Evangelos Chytis, Zois Hortis, Ioannis Georgopoulos, Stergios Tasios

Title: The Relationship between Tax Avoidance, Company Characteristics and Corporate Governance

Abstract

Purpose: The purpose of this paper is to research a possible relationship between corporate tax avoidance with corporate governance qualities such as board independence, the type of auditing company and the concentration of ownership, and a range of selected financial indicators such as return on assets, liquidity, leverage and company size.

Design / Methodology / Approach: The survey was based on quantitative and qualitative data derived from the Annual Financial Reports from a representative sample of 56 companies listed on the Athens Stock Exchange covering the period 2011 to 2015. As a measure of tax avoidance, used the cash effective tax rate and for the estimation of the factors influencing its size, the linear regression model using the random effect method.

Findings: The results of the survey show that the cash effective tax rate has a statistically significant positive relationship with leverage, company size and return on assets, and a statistically significant negative relationship with the type of auditing firm (big4).

Conclusions: The survey shows that Greek companies with high leverage, large size and high return on assets are more efficient and productive in their operation and show less tax avoidance, whereas companies audited by the largest international auditing firms (known as Big4), the extent of tax avoidance is higher.

keywords: Cash Effective Tax Rate, Tax Avoidance, Corporate Governance, Audit Firms, Ownership Concentration, Board Independence.

JEL classifications: M14, M38, M40, M41