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The Interaction Effect of Female Leadership in Audit Committees on the Relationship Between Audit Quality and Corporate Tax Avoidance

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Listed:
  • Naila Amara

    (Department of Accounting and Finance, Institute of Higher Commercial Studies (IHEC) of Sousse, University of Sousse, Sousse 4054, Tunisia)

  • Houssam Bouzgarrou

    (Department of Accounting and Finance at ISFFS, University of Sousse, Sousse 4054, Tunisia)

  • Saad Bourouis

    (Department of Accounting and Finance, Institute of Higher Commercial Studies (IHEC), University of Sousse, Sousse 4054, Tunisia)

  • Sajead Mowafaq Alshdaifat

    (Department of Financial and Accounting Sciences, Faculty of Business, Middle East University, Amman 11831, Jordan)

  • Hamzeh Al Amosh

    (Department of Financial Intelligence, University of South Africa, Pretoria 0002, South Africa
    Jadara University Research Center, Jadara University, Irbid 21110, Jordan)

Abstract

This study examines the moderating role of female audit committee chairs on the relationship between audit quality (measured by audit fees) and corporate tax avoidance. The analysis is based on 165 UK firms between 2011 and 2021 using static panel data regression models and Lewbel’s heteroscedastic identification method to check robustness. The findings highlight the significant role of audit quality in reducing corporate tax avoidance. In addition, the female audit committee chair strengthens the negative relationship between audit quality and tax avoidance. This study has many implications. For corporate governance, it shows the value of female leadership in audit committees, especially in curbing aggressive tax strategies. Firms should increase female representation in key roles, like audit committee chairs, to improve oversight and ethical financial practices. For regulators and policymakers, it supports the case for strengthening gender diversity mandates to improve corporate transparency and accountability. Tax authorities can use the fact that firms with strong audit quality and female-led audit committees are less likely to engage in tax avoidance to focus their audits on companies with weaker governance structures.

Suggested Citation

  • Naila Amara & Houssam Bouzgarrou & Saad Bourouis & Sajead Mowafaq Alshdaifat & Hamzeh Al Amosh, 2025. "The Interaction Effect of Female Leadership in Audit Committees on the Relationship Between Audit Quality and Corporate Tax Avoidance," JRFM, MDPI, vol. 18(1), pages 1-17, January.
    • Handle: RePEc:gam:jjrfmx:v:18:y:2025:i:1:p:27-:d:1565096
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    References listed on IDEAS

    as
    1. Anis Jarboui & Maali Kachouri Ben Saad & Rakia Riguen, 2020. "Tax avoidance: do board gender diversity and sustainability performance make a difference?," Journal of Financial Crime, Emerald Group Publishing Limited, vol. 27(4), pages 1389-1408, February.
    2. Ahsan Habib & Dinithi Ranasinghe & Ahesha Perera, 2024. "Strategic Deviation and Corporate Tax Avoidance: A Risk Management Perspective," JRFM, MDPI, vol. 17(4), pages 1-24, April.
    3. Arthur Lewbel, 2012. "Using Heteroscedasticity to Identify and Estimate Mismeasured and Endogenous Regressor Models," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 30(1), pages 67-80.
    4. Minnick, Kristina & Noga, Tracy, 2010. "Do corporate governance characteristics influence tax management?," Journal of Corporate Finance, Elsevier, vol. 16(5), pages 703-718, December.
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    6. Paul Collier & Alan Gregory, 1996. "Audit committee effectiveness and the audit fee," European Accounting Review, Taylor & Francis Journals, vol. 5(2), pages 177-198.
    7. Li, Xuelian & Liu, Ming, 2024. "Abnormal audit fees and financial reporting quality: A meta-analysis," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 55(C).
    8. Wongsinhirun, Nopparat & Chatjuthamard, Pattanaporn & Chintrakarn, Pandej & Jiraporn, Pornsit, 2024. "Tax avoidance, managerial ownership, and agency conflicts," Finance Research Letters, Elsevier, vol. 61(C).
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