The Impact of Audit Characteristics on Corporate Tax Avoidance: The Moderating Role of Gender Diversity


  • Rakia Riguen
  • Bassem Salhi
  • Anis Jarboui



audit characteristics, tax avoidance, board gender diversity


The purpose of this paper is to investigate the relation between audit characteristics and corporate tax avoidance and how board gender diversity (BGDs) moderates this relationship. Using a sample of 270 UK firms over the 2005-2017 period, we find that audit characteristics influence the corporate tax avoidance. Two of them (specialization and audit fees) had a negative effect; the other one (audit opinion, audit rotation) Have a positive effect on tax avoidance. We also find that BGDs moderates the effect of audit characteristics on corporate tax avoidance, except for audit opinion. The impact of the BGDs’ level increases as the presence of woman in the board escalated from 40 to 60 %, but then weakened at 10 % level. This study contributes to the existing literature and auditing practices by extending the auditing and tax literature on the examination of the moderating effect of board gender diversity on the relation between audit characteristics and corporate tax avoidance using the sensitivity analysis.

JEL Codes - H26; M14; M4


Adams, R. B., and Ferreira, D., 2009. Women in the boardroom and their impact on governance and performance. Journal of Financial Economics, 94(2), 291-309.

Ahmad, M., Mohamed, H., and Nelson, S. P., 2016. The association between industry specialist auditor and financial reporting timeliness-Post MFRS period. Procedia: Social and Behavioral Sciences, 219, 55-62.

Ambrose, M. L., and Schminke, M., 1999. Sex differences in business ethics: The importance of perceptions. Journal of Managerial Issues, 11(4), 454.

Armstrong, C. S., Blouin, J. L., Jagolinzer, A. D., and Larcker, D. F., 2015. Corporate governance, incentives, and tax avoidance. Journal of Accounting and Economics, 60(1), 1-17.

Bae, S. H., 2017. The Association between Corporate Tax Avoidance and Audit Efforts: Evidence From Korea. Journal of Applied Business Research, 33(1), 153-172.

Balsam, S., Krishnan, J., and Yang, J. S., 2003. Auditor industry specialization and earnings quality. Auditing: A journal of practice & Theory, 22(2), 71-97.

Bianchi, P. A., Falsetta, D., Minutti-Meza, M., and Weisbrod, E., 2014. Auditor Networks and Tax Avoidance: Evidence from private firms. University of Miami Working Paper, 1-35.

Bryman, A., and Cramer, D., 1997. Quantitative data analysis with SPSS for Windows: A guide for social scientists: Routledge.

Cameran, M., Prencipe, A., and Trombetta, M., 2016. Mandatory Audit Firm Rotation and Audit Quality. European Accounting Review, 25(1), 35-58.

Campbell, K., and Minguez-Vera, A., 2008. Gender diversity in the boardroom and firm financial performance. Journal of Business Ethics, 83(3), 435-451.

Caramanis, C., and Lennox, C. S., 2008. Audit Effort and Earnings Management. Journal of Accounting and Economics, 45, 116-138.

Carcello, J. V., Hermanson, D. R., Neal, T. L., and Riley, R. A., 2002. Board characteristics and audit fees. Contemporary Accounting Research, 19(3), 365-384.

Chasbiandani, T., and Martani, D., 2012. Pengaruh Tax Avoidance Jangka Panjangterhadap Nilai Perusahaan. Jurnal dan Prosiding SNA - Simposium Nasional Akuntansi, XV(90).

Chen, C. J., Chen, S., and Su, X., 2001. Profitability regulation, earnings management, and modified audit opinions: Evidence from China. Auditing, 20(2), 9-30.

Chi, W., Douthett, E. B., and Lisic, L. L., 2012. Client importance and audit partner independence. Journal of Accounting and Public Policy, 31(3), 320-336.

Chow, C. W., and Rice, S. J., 1982. Qualified audit opinions and auditor switching. The Accounting Review, ooo, 326-335.

Craswell, A., Stokes, D. J., and Laughton, J., 2002. Auditor independence and fee dependence. Journal of Accounting and Economics, 33(2), 253-275.

DeAngelo, L. E., 1981. Auditor independence, 'low balling', and disclosure regulation. Journal of Accounting and Economics, 3(2), 113-127.

Dedman, E., and Kausar, A., 2012. The impact of voluntary audit on credit ratings: Evidence from UK private firms. Accounting and Business Research, 42(4), 397-418.

Desai, M. A., and Dharmapala, D., 2006. Corporate tax avoidance and high-powered incentives. Journal of Financial Economics, 79(1), 145-179.

Dopuch, N., King, R. R., and Schwartz, R., 2001. An experimental investigation of retention and rotation requirements. Journal of Accounting Research, 39(1), 93-117.

Dyreng, S. D., Hanlon, M., and Maydew, E. L., 2008. Long-run corporate tax avoidance. The Accounting Review, 83(1), 61-82.

Fama, E. F., and Jensen, M. C., 1983. Separation of ownership and control. The Journal of Law & Economics, 26(2), 301-325.

Gaaya, S., Lakhal, N., and Lakhal, F., 2017. Does family ownership reduce corporate tax avoidance? The moderating effect of audit quality. Managerial Auditing Journal, 32(7), 731-744.

Gandia, J. L., and Huguet, D., 2019. Audit fees and cost of debt: Differences in the credibility of voluntary and mandatory audits. Economic research. Ekonomska Istrazivanja, ooo, 1-22.

Gilson, S. C., 1990. Bankruptcy, boards, banks, and blockholders: Evidence on changes in corporate ownership and control when firms default. Journal of Financial Economics, 27(2), 355-387.

Gupta, S., and Newberry, K., 1997. Determinants of the variability in corporate effective tax rates: Evidence from longitudinal data. Journal of Accounting and Public Policy, 16(1), 1-34.

Habbash, M., and Alghamdi, S., 2017. Audit quality and earnings management in less developed economies: The case of Saudi Arabia. The Journal of Management and Governance, 21(2), 351-373.

Hanlon, M., 2005. The persistence and pricing of earnings, accruals, and cash flows when firms have large book-tax differences. The Accounting Review, 80(1), 137-166.

Hanlon, M., and Heitzman, S., 2010. A review of tax research. Journal of Accounting and Economics, 50(2-3), 127-178.

Hanlon, M., Krishnan, G. V., and Mills, L. F., 2012. Audit fees and book-tax differences. The Journal of the American Taxation Association, 34(1), 55-86.

He, G., Ren, H. M., and Taffler, R., 2019. The impact of corporate tax avoidance on analyst coverage and forecasts. Review of Quantitative Finance and Accounting, 54, 447-477.

Herbohn, K., and Ragunathan, V., 2008. Auditor reporting and earnings management: Some additional evidence. Accounting and Finance, 48(4), 575-601.

Hoi, C. K., Wu, Q., and Zhang, H., 2013. Is Corporate Social Responsibility (CSR) Associated with Tax Avoidance? Evidence from Irresponsible CSR Activities. The Accounting Review, 88(6), 2025-2059.

Hoseini, M., Safari Gerayli, M., and Valiyan, H., 2019. Demographic characteristics of the board of directors' structure and tax avoidance: Evidence from Tehran Stock Exchange. International Journal of Social Economics, 46(2), 199-212.

Hu, N., 2018. Tax Avoidance, Property Rights and Audit Fees. American Journal of Industrial and Business Management, 8(03), 461-472.

Jihene, F., and Moez, D., 2019. The Moderating Effect of Audit Quality on CEO Compensation and Tax Avoidance: Evidence from Tunisian Context. International Journal of Economics and Financial Issues, 9(1), 131-139.

Johnson, P. E., Jamal, K., and Berryman, R. G., 1991. Effects of framing on auditor decisions. Organizational Behavior and Human Decision Processes, 50(1), 75-105.

Kanagaretnam, K., Lee, J., Lim, C. Y., and Lobo, G. J., 2016. Relation between auditor quality and tax aggressiveness: Implications of cross-country institutional differences. Auditing, 35(4), 105-135.

Kerr, J. N., Price, R., and Román, F. J., 2016. The Effect of Corporate Governance on Tax Avoidance: Evidence from Governance Reform. 109th Annual Conference Proceedings.

Khan, N., and Chen, S., 2017. Mediating effects of audit quality on the relationship between audit firm rotation and tax avoidance: Evidence from China. Journal of Applied Economics & Business Research, 7(4).

Kinney, W. R., Palmrose, Z. V., and Scholz, S., 2004. Auditor independence, non-audit services, and restatements: Was the US government right? Journal of Accounting Research, 42(3), 561-588.

Kinnunen, J., Niemi, L., Troberg, P., and Collis, J., 2017. What turns the taxman on? Audit opinion and tax return adjustments in a voluntary audit environment.

Kraft, A., and Lopatta, K., 2016. Auditor fees, discretionary book-tax differences, and tax avoidance. International Journal of Economics and Accounting, 7(2), 127-155.

Krishnan, G. V., 2003. Does Big 6 auditor industry expertise constrain earnings management? Accounting Horizons, Supplement, 1-16.

Lai, K. M., Srinidhi, B., Gul, F. A., and Tsui, J. S., 2017. Board gender diversity, auditor fees, and auditor choice. Contemporary Accounting Research, 34(3), 1681-1714.

Lanis, R., and Richardson, G., 2012. Corporate social responsibility and tax aggressiveness: An empirical analysis. Journal of Accounting and Public Policy, 31(1), 86-108.

Lee, R. J., and Kao, H. S., 2018. The Impacts of IFRSs and Auditor on Tax Avoidance. Advances in Management and Applied Economics, 8(6), 17-53.

Lennox, C. S., 2000. Going-concern opinions in failing companies: Auditor dependence and opinion shopping. ssrn, 240468.

McGuire, S. T., Omer, T. C., and Wang, D., 2012. Tax avoidance: Does tax-specific industry expertise make a difference? The Accounting Review, 87(3), 975-1003.

Mills, L. F., 1998. Book-tax differences and Internal Revenue Service adjustments. Journal of Accounting Research, 36(2), 343-356.

Minnick, K., and Noga, T., 2010. Do corporate governance characteristics influence tax management? Journal of Corporate Finance, 16(5), 703-718.

O’Reilly, D. M., and Reisch, J. T., 2002. Industry specialization by audit firms: What does academic research tell us? Ohio CPA Journal, 61(3), 42-45.

Omer, T. C., Bedard, J. C., and Falsetta, D., 2006. Auditor-provided tax services: The effects of a changing regulatory environment. The Accounting Review, 81(5), 1095-1117.

Palmrose, Z. V., 1986. Audit fees and auditor size: Further evidence. Journal of Accounting Research, 24, 97-110.

Paulina, S., 2019. CEO Overconfidence, Audit Firm Size, Real Earnings Management and Audit Opinion. Academy of Accounting and Financial Studies Journal, 23(1).

Phillips, J. D., 2003. Corporate tax-planning effectiveness: The role of compensation-based incentives. The Accounting Review, 78(3), 847-874.

Richardson, G. A., Taylor, G., and Alhadi, A., 2018. Income Shifting Arrangements, Audit Specialization and Uncertain Tax Benefits: An Empirical Analysis of US Multinational Firms. International Journal of Auditing.

Sahlman, W. A., 1990. Why sane people shouldn't serve on public boards. Harvard Business Review, 68(3), 28-32.

Sari, D., and Tjen, C., 2017. Corporate social responsibility disclosure, environmental performance, and tax aggressiveness. International Research Journal of business studies, 9(2).

Schminke, M., and Ambrose, M. L., 1997. Asymmetric perceptions of ethical frameworks of men and women in business and nonbusiness settings. Journal of Business Ethics, 16(7), 719-729.

Soliman, M. M., and Ragab, A. A., 2014. Audit committee effectiveness, audit quality and earnings management: An empirical study of the listed companies in Egypt. Research Journal of Finance and Accounting, 5(2), 155-166.

Stickney, C. P., and McGee, V. E., 1982. Effective corporate tax rates the effect of size, capital intensity, leverage, and other factors. Journal of Accounting and Public Policy, 1(2), 125-152.

Sunarsih, U., and Oktaviani, K., 2016. Good Corporate Governance in Manufacturing Companies Tax Avoidance. Etikonomi, 15(2).

Wahl, I., Kastlunger, B., and Kirchler, E., 2010. Trust in authorities and power to enforce tax compliance: An empirical analysis of the "Slippery Slope Framework". Law & Policy, 32(4), 383-406.

Wang, K. J., and Tuttle, B. M., 2009. The impact of auditor rotation on auditor-client negotiation. Accounting, Organizations and Society, 34(2), 222-243.

Watson, L., 2015. Corporate social responsibility, tax avoidance, and earnings performance. The Journal of the American Taxation Association, 37(2), 1-21.




How to Cite

Riguen, R., Salhi, B., & Jarboui, A. (2021). The Impact of Audit Characteristics on Corporate Tax Avoidance: The Moderating Role of Gender Diversity. Scientific Annals of Economics and Business, 68(1), 97–114.




Most read articles by the same author(s)