The Interaction Effect of Female Leadership in Audit Committees on the Relationship Between Audit Quality and Corporate Tax Avoidance

Naila Amara, Houssam Bouzgarrou, Saad Bourouis, Sajead Mowafaq Alshdaifat and Hamzeh Al Amosh ()
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Naila Amara: Department of Accounting and Finance, Institute of Higher Commercial Studies (IHEC) of Sousse, University of Sousse, Sousse 4054, Tunisia
Houssam Bouzgarrou: Department of Accounting and Finance at ISFFS, University of Sousse, Sousse 4054, Tunisia
Saad Bourouis: Department of Accounting and Finance, Institute of Higher Commercial Studies (IHEC), University of Sousse, Sousse 4054, Tunisia
Sajead Mowafaq Alshdaifat: Department of Financial and Accounting Sciences, Faculty of Business, Middle East University, Amman 11831, Jordan
Hamzeh Al Amosh: Department of Financial Intelligence, University of South Africa, Pretoria 0002, South Africa

JRFM, 2025, vol. 18, issue 1, 1-17

Abstract: This study examines the moderating role of female audit committee chairs on the relationship between audit quality (measured by audit fees) and corporate tax avoidance. The analysis is based on 165 UK firms between 2011 and 2021 using static panel data regression models and Lewbel’s heteroscedastic identification method to check robustness. The findings highlight the significant role of audit quality in reducing corporate tax avoidance. In addition, the female audit committee chair strengthens the negative relationship between audit quality and tax avoidance. This study has many implications. For corporate governance, it shows the value of female leadership in audit committees, especially in curbing aggressive tax strategies. Firms should increase female representation in key roles, like audit committee chairs, to improve oversight and ethical financial practices. For regulators and policymakers, it supports the case for strengthening gender diversity mandates to improve corporate transparency and accountability. Tax authorities can use the fact that firms with strong audit quality and female-led audit committees are less likely to engage in tax avoidance to focus their audits on companies with weaker governance structures.

Keywords: tax avoidance; audit quality; female audit committee chair; agency theory; resource dependence theory; UK (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2025
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