Does the Interplay Between Audit Committee Independence and Audit Quality Mitigate Tax Avoidance? Evidence from Non-Financial Firms Listed on the Amman Stock Exchange

Hamzeh Yousef Abu Quba, Krayyem Al-Hajaya and Ahmed Eltweri ()
Additional contact information
Hamzeh Yousef Abu Quba: Accounting Department, Faculty of Economics and Administrative Science, Zarqa University, Zarqa 13110, Jordan
Krayyem Al-Hajaya: Department of Accounting, Mu’tah University, Mu’tah 61710, Jordan
Ahmed Eltweri: Liverpool Business School, Liverpool John Moores University, Liverpool L1 9DE, UK

Administrative Sciences, 2025, vol. 15, issue 11, 1-22

Abstract: Through the synergy between an independent audit committee (AC) and the high-quality external audit, the opportunities for unethical management behavior, including tax avoidance, can be significantly reduced. Independent audit committees and fair audit fees jointly strengthen governance by ensuring oversight integrity, audit quality, and a reduced risk of unethical tax avoidance. Therefore, the study aimed to identify the impact of AC independence on tax avoidance practices in non-financial firms listed on the Amman Stock Exchange (ASE), considering the moderating role of the external AFs. The research used a sample consisting of 53 non-financial companies listed on the ASE from 2017 to 2023, yielding 371 firm-year observations. Regression analysis was applied to test the direct effect of AC independence on tax avoidance, as well as the interaction effect of AFs. The results show that the effect exerted by the independence of AC on tax avoidances is negative but statistically insignificant. However, when the interaction between AC independence and AFs is considered, the effect becomes statistically significant, indicating that appropriate audit fees enhance the effectiveness of AC independence in curbing tax avoidance. The study shows that audit committee independence is effective only when supported by fair audit fees, underscoring the need for balanced governance practices in emerging markets like Jordan.

Keywords: audit committee independence; unethical tax avoidance; external audit quality; audit fees; tax avoidance; Jordan (search for similar items in EconPapers)
JEL-codes: L M M0 M1 M10 M11 M12 M14 M15 M16 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/2076-3387/15/11/426/pdf (application/pdf)
https://www.mdpi.com/2076-3387/15/11/426/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jadmsc:v:15:y:2025:i:11:p:426-:d:1783823

Access Statistics for this article

Administrative Sciences is currently edited by Ms. Nancy Ma

More articles in Administrative Sciences from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().