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Firm Risk and Tax Avoidance in Vietnam: Do Good Board Characteristics Interfere Effectively?

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  • Trung Kien Tran

    (School of Public Finance, College of Economics, Law, and Government, University of Economics Ho Chi Minh City, Ho Chi Minh City 700000, Vietnam)

  • Minh Tuan Truong

    (School of Public Finance, College of Economics, Law, and Government, University of Economics Ho Chi Minh City, Ho Chi Minh City 700000, Vietnam)

  • Kim Tu Bui

    (Faculty of Taxation and Customs, University of Finance-Marketing, Ho Chi Minh City 700000, Vietnam)

  • Phung Duc Duong

    (Faculty of Taxation and Customs, University of Finance-Marketing, Ho Chi Minh City 700000, Vietnam)

  • Minh Vuong Huynh

    (Faculty of National Defense and Physical Education, University of Finance-Marketing, Ho Chi Minh City 700000, Vietnam)

  • Tran Thai Ha Nguyen

    (Faculty of Finance and Accounting, Saigon University, Ho Chi Minh City 700000, Vietnam)

Abstract

This paper investigates the role of board characteristics in the relationship between tax avoidance behavior and corporate risk tolerance to elucidate the importance of corporate governance mechanisms. The applied methodology is System-GMM for 334 listed corporations in Vietnam from 2008 to 2020 to avoid endogenous problems in our models. The main findings are that higher (lower) corporate risk-taking is related to higher (lower) corporate tax avoidance if the size of the board of directors and the supervisory board are larger (lower) than six and three members, respectively. Furthermore, if the board independence ratio is lower than 48.63%, an increase in corporate risk-taking leads to increased tax avoidance. Our results support the argument that the influence of corporate risk-taking on tax avoidance behavior is governed by governance structure. Therefore, the practical implications will be towards building the optimal governance mechanism for enterprises in Vietnam.

Suggested Citation

  • Trung Kien Tran & Minh Tuan Truong & Kim Tu Bui & Phung Duc Duong & Minh Vuong Huynh & Tran Thai Ha Nguyen, 2023. "Firm Risk and Tax Avoidance in Vietnam: Do Good Board Characteristics Interfere Effectively?," Risks, MDPI, vol. 11(2), pages 1-17, February.
    • Handle: RePEc:gam:jrisks:v:11:y:2023:i:2:p:39-:d:1063173
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    References listed on IDEAS

    as
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