The Effect of Female Employment on Corporate Sustainability in Terms of Tax Avoidance

Chang Seop Rhee, Sohee Woo and Dong Hyun Kim
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Chang Seop Rhee: School of Business, Sejong University, 209 Neungdong-ro, Gwangjin-gu, Seoul 05006, Korea
Sohee Woo: Global Management, Endicotte College, Woosong University, 171 Dongdaejeon-ro, Dong-gu, Daejeon 34606, Korea
Dong Hyun Kim: College of Business and Economics, Chung-Ang University, 84 Heukseok-ro, Dongjak-gu, Seoul 06974, Korea

Sustainability, 2019, vol. 12, issue 1, 1-15

Abstract: Recent studies on tax avoidance report that having female executives in companies increases accounting transparency and firm value by reducing tax avoidance. These studies explain that the more risk-averse and conservative characteristics of females affect corporate decision making about tax strategies if the company has female executives. In this study, we assume that the higher the proportion of female employees in a company, the more likely the risk-averse and conservative characteristics of females will affect the firm’s decision making, thereby reducing tax avoidance activities and improving corporate sustainability. To verify this hypothesis, we empirically analyze the association between the female employee ratio and tax avoidance. From the empirical results, we find increasing the female employee ratio may reduce the level of tax avoidance. We also find that companies with a high percentage of female employees show less tax avoidance than those with a low percentage of female employees. The findings suggest that by increasing the ratio of female employees, a company can improve its sustainability in terms of tax avoidance by forming a risk-averse and conservative corporate environment.

Keywords: corporate sustainability; female human resources; female employment; gender-related influences; tax avoidance (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2019
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