Political Connection Types and Corporate Tax Avoidance: Evidence from Malaysia

Abstract

This study examines whether dissimilar types of politically connected firms (PCFs) are related to corporate tax avoidance. Additionally, it investigates whether this association is moderated by chief executive officer (CEO) shareholding and institutional ownership. Using the dataset of Malaysian public listed companies from 2002 till 2018, our findings suggest that PCFs are associated with higher corporate tax avoidance which is largely driven by older PCFs and government-linked companies (GLCs). Further analyses reveal that the association between older PCFs and GLCs and higher corporate tax avoidance is stronger in firms with higher CEO shareholding and institutional ownership.