The Role of Female Executives in Corporate Tax Avoidance

Abstract

The main purpose of this study is to analyze empirically the effect of the number of female executives on tax avoidance. Specifically, it verifies how the number of female executives affects tax avoidance. Previous studies have found two outcomes；female executives are risk－averse and conservative in decision－making；female executives are risk－taking. If a female executive is risk－averse, then there will be a decrease in tax avoidance, and if a female executive is risk－taking, there will be an increase in tax avoidance, so this study is intended to validate this. From 2013 to 2017, the effect of the number of female in non－financial companies listed on the stock market to settle accounts in December executives on tax avoidance was analyzed.The method proposed by Desai and Dharmapala (2006) was used as an proxy variable of tax avoidance and the results were as follows；the increase in the number of female executives has increased tax avoidance. As Iqbal, O & Baek (2006) argued, if female executives are willing to take risks, they are likely to be active in tax avoidance that requires them to take risks. Therefore, it may be said that an aggressive tax strategy is relatively preferred. In addition to the tendency of the Board of Directors including female executives, the active or open nature of the corporate culture of holding female executives can be interpreted as having an additional effect on tax avoidance. This is because corporate aggressive tendencies or cultures have a positive relationship with tax avoidance (Choi Ki－ho, 2018).This empirical study shows that the tax strategy may vary depending on the decision maker's inclination, given that the number of female executives affects tax avoidance. It is significant in that this research analyzed for the first time that gender diversification of executives has an impact on the tax avoidance of the entity.