JEL Classification System
F23, G32, H26, O16
Abstract
Tax avoidance schemes used by firms to lessen their tax burden have long attracted widespread concern in the Philippines, where poor tax collection due to tax leakages has contributed to chronic fiscal deficits in the country. In this regard, corporate governance mechanisms, such as the firm’s ownership structure, play a significant role in ensuring that management acts ethically and in the best interest of the firm’s owners. In this study, we examine the effect of foreign ownership on corporate tax avoidance for non-financial firms listed in the Philippine Stock Exchange (PSE) from 2009 to 2015. Using three different measures of foreign ownership and two measures of corporate tax avoidance, our analysis of an unbalanced and dynamic panel dataset with the two-step system generalized method of moments (GMM) estimator yields some evidence of a significant and positive relationship between the degree of foreign participation in boards and corporate tax avoidance. Against this background, we argue that policymakers and regulators should carefully evaluate the costs and benefits of foreign participation in boards of companies, given the opportunity for corporate tax avoidance.
Recommended Citation
Shi, Ailyn A.; Concepcion, Francis R.; Laguinday, Cheri Mae R.; Ong Hian Huy, Trisha Amber T.; and Unite, Angelo A.
(2020)
"An Analysis of the Effects of Foreign Ownership on the Level of Tax Avoidance Across Philippine Publicly Listed Firms,"
DLSU Business & Economics Review: Vol. 30:
No.
1, Article 3.
DOI: https://doi.org/10.59588/2243-786X.1115
Available at:
https://animorepository.dlsu.edu.ph/ber/vol30/iss1/3
Included in
Accounting Commons, Economics Commons, Finance and Financial Management Commons, Marketing Commons
