Determinants of the effective tax rate: Board composition of South African firms listed on the Johannesburg Stock Exchange

Cecileen Greeff

South African Journal of Accounting Research, 2025, vol. 39, issue 1, 27-49

Abstract: Motivation: Numerous international studies have been conducted to determine the effect of board composition on tax aggressiveness, and ultimately the effective tax rate (ETR) of firms, but to the best of the author's knowledge, no similar research from a South African perspective has been conducted.Purpose: This study explores the association between board composition and the ETR of South African Johannesburg Stock Exchange (JSE)-listed firms for the period 2012 to 2021 to obtain an understanding of how corporate governance attributes affect the ETR of firms.Design and methodology: A sample of 40 firms is purposively selected from the top 200 JSE-listed firms based on market capitalisation on 31 December 2021. The study employs a quantitative approach by applying the panel data multivariate regression model.Main findings: The study shows that board size, as a corporate governance attribute, is a determinant of the ETR of South African JSE-listed firms. Additionally, other board composition-related corporate governance attributes such as independence, gender diversity, and director shareholding showed no substantial association with the ETR.Practical implications: The results of this study indicate that the board of directors – specifically its composition – is successful in its role of ensuring that the firm is, and is seen to be, a responsible corporate citizen by paying its fair share of taxes.Novelty: This study is the first to offer empirical evidence linking board composition to South African JSE-listed firms’ ETRs. The result of the study therefore fills a research gap and has the potential to guide board governance committees and increase directors’ awareness of their tax-related roles.

Date: 2025
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DOI: 10.1080/10291954.2024.2334141

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