Antecedents of tax aggressiveness and performance of Listed firms in ghana

Abstract

This thesis draws inspiration from agency theory, Hoffman's tax planning theory, resource dependency theory, pecking order theory, and legitimacy theory to investigate the antecedents of tax aggressiveness, the efIect of tax aggressiveness on financial perfotmance, earnings management and corporate transparency, and the moderating role of tax risk and corporate governance on the relationship between tax aggressiveness and financial performance of listed non-financial firms in Ghana. The study used a two-step system generalised method of moment (SGMM) approach to analyse the data covering from 20 I 0 to 2019. The study found board size, board gender diversity, non-executive directors, institutional ownership, and ownership structure to have a significant positive effect on tax aggressiveness. Political connection and financial constraints had a significant positive impact on tax aggressiveness while CSR had mi xed efIects on tax aggressiveness. Tax aggressiveness positi vely affects firm performance, regardless of the proxy. While the marginal effects of tax aggressiveness and corporate governance on the relationships between tax aggressiveness and ROE and ROA were positive, they were negative for Tobin's Q. The study concluded that firms that engage in tax aggressiveness have low earnings quality and lack transparency in their dealings. Again, it was concluded that sound corporate governance structures could smoothen out part of the agency costs that might arise from opportunistic managerial behaviours, thereby, improving firm performance - returns on assets and equity. The study recommends that finns should utilise the services of tax experts and consultants for effective tax planning.