Corporate Tax Avoidance Incentives of Banks in Ghana

Samuel Kwaku Agyei, Edward Marfo-Yiadom, Abraham Ansong and Anthony Adu Asare Idun

Journal of African Business, 2020, vol. 21, issue 4, 544-559

Abstract: This study built on the tax avoidance literature in at least two main strands: 1) applying the tax avoidance theories and hypothesis to financial institutions which have been neglected in the empirical literature; and 2) assessing the possibility of tax avoidance persistence among banks, from a developing country perspective. Data from 18 commercial banks in Ghana from 2010 to 2014 were analyzed using systems generalized method of moments estimation technique. The study concluded that while the presence of non-executive directors on boards, aging banks, and liquidity condition motivate banks to engage in tax avoidance schemes, big banks and banks at their latter stages in their lifecycle are discouraged from undertaking tax avoidance activities. Thus, tax avoidance activities exist in financial institutions just like non-financial firms but no evidence exists to support the assertion that tax avoidance schemes persist among banks. Managers of financial institutions must take advantage of existing tax avoidance opportunities by designing appropriate policies that factor in relevant firm-level characteristics.

Date: 2020
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Citations: View citations in EconPapers (7)

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DOI: 10.1080/15228916.2019.1695183

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