Effect of Audit Committee on Tax Aggressiveness: French Evidence

Ahmad Alqatan, Safa Chemingui and Muhammad Arslan ()
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Ahmad Alqatan: Department of Business, Arab Open University, Ardiya 92400, Kuwait
Safa Chemingui: Tunis Higher Institute of Management, Tunis 2000, Tunisia
Muhammad Arslan: Department of Accounting, Open Polytechnic–Te Pūkenga, Lower Hutt 5011, New Zealand

JRFM, 2024, vol. 18, issue 1, 1-19

Abstract: This study investigates the effect of audit committee characteristics on the level of tax aggressiveness. Drawing on a sample of 72 French listed firms from the SBF120 index for the period from 2015 to 2022, this study measures the level of tax aggressiveness through the effective tax rate (cash ETR). The descriptive statistics, correlation matrix, variance inflation factor (VIF), and feasible generalized least squares (FGLS) regression were used for analysis of panel data. The findings reveal that measures of the independence of the audit committee, expertise of the audit committee, and audit committee size are significantly linked to tax aggressiveness. The findings also highlighted that the frequency of audit committee meetings is weakly linked to tax aggressiveness. The effectiveness of audit committee members can send a strong signal to the tax authorities, the shareholders, regulators, and the investors who are concerned about the risk of tax aggressiveness. This study contributes to the existing literature aimed at exploring the effect of audit committee characteristics on tax aggressiveness in a French context. This study has several implications for regulators, policymakers, and academia. It helps the policymakers and regulators in policy reforms who aim at combating aggressive tax practices in France, which is one of the primary objectives within the European Union (EU) framework.

Keywords: independent audit committee; audit committee expertise; audit committee size; tax aggressiveness; EU; France (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2024
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