Corporate tax avoidance: Is South African society negatively affected by chartered accountant CEOs?
Corporate tax avoidance can impede governments’ spending towards social and economic initiatives that can increase infrastructure development, economic growth, and equality, and reduce poverty. Yet, why some companies avoid more tax than others is not adequately understood, and, in particular, rese...
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| Format: | Article |
| Language: | English |
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Academy of Science of South Africa
2023-11-01
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| Series: | South African Journal of Science |
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| Online Access: | https://sajs.co.za/article/view/15549 |
| _version_ | 1797447928191647744 |
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| author | Pieter van der Spuy Phillip de Jager |
| author_facet | Pieter van der Spuy Phillip de Jager |
| author_sort | Pieter van der Spuy |
| collection | DOAJ |
| description |
Corporate tax avoidance can impede governments’ spending towards social and economic initiatives that can increase infrastructure development, economic growth, and equality, and reduce poverty. Yet, why some companies avoid more tax than others is not adequately understood, and, in particular, research regarding the influence of CEO-characteristics on tax avoidance, is lacking. This study is an empirical investigation into the influence of a CEO’s tax knowledge and tax awareness, construed as a ‘CEO effect’, on corporate tax avoidance, using data from the 112 largest listed companies on the Johannesburg Securities Exchange between 2004 and 2018. We found that the CEO effect, not measured before, does not have an observable influence on the level of corporate tax avoidance. This finding assuages possible concerns that chartered accountants, and particularly chartered accountants in the top leadership positions in large companies, are more shareholder oriented, to the detriment of the interests of society, as suggested in the literature.
Significance:
Our findings suggest less influence of the CEO, as an upper-echelon member, on companies’ behaviour, such as corporate tax avoidance, than other published studies have found. Moreover, the findings indicate that the tax knowledge and awareness construed as a CEO effect, does not influence corporate tax avoidance. In the main, the results provide little support for claims made by the South African Institute of Chartered Accountants, the chartered accountant’s regulatory body, that chartered accountants can help companies to avoid tax to increase profits. This may sway society’s view of the chartered accountant and their role in the South African economy.
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| first_indexed | 2024-03-09T14:03:01Z |
| format | Article |
| id | doaj.art-7d235b54f2954367abe476152f92772f |
| institution | Directory Open Access Journal |
| issn | 1996-7489 |
| language | English |
| last_indexed | 2024-03-09T14:03:01Z |
| publishDate | 2023-11-01 |
| publisher | Academy of Science of South Africa |
| record_format | Article |
| series | South African Journal of Science |
| spelling | doaj.art-7d235b54f2954367abe476152f92772f2023-11-30T06:41:34ZengAcademy of Science of South AfricaSouth African Journal of Science1996-74892023-11-0111911/1210.17159/sajs.2023/15549Corporate tax avoidance: Is South African society negatively affected by chartered accountant CEOs?Pieter van der Spuy0Phillip de Jager1School of Accountancy, Stellenbosch University, Stellenbosch, South AfricaDepartment of Finance and Tax, University of Cape Town, Cape Town, South Africa Corporate tax avoidance can impede governments’ spending towards social and economic initiatives that can increase infrastructure development, economic growth, and equality, and reduce poverty. Yet, why some companies avoid more tax than others is not adequately understood, and, in particular, research regarding the influence of CEO-characteristics on tax avoidance, is lacking. This study is an empirical investigation into the influence of a CEO’s tax knowledge and tax awareness, construed as a ‘CEO effect’, on corporate tax avoidance, using data from the 112 largest listed companies on the Johannesburg Securities Exchange between 2004 and 2018. We found that the CEO effect, not measured before, does not have an observable influence on the level of corporate tax avoidance. This finding assuages possible concerns that chartered accountants, and particularly chartered accountants in the top leadership positions in large companies, are more shareholder oriented, to the detriment of the interests of society, as suggested in the literature. Significance: Our findings suggest less influence of the CEO, as an upper-echelon member, on companies’ behaviour, such as corporate tax avoidance, than other published studies have found. Moreover, the findings indicate that the tax knowledge and awareness construed as a CEO effect, does not influence corporate tax avoidance. In the main, the results provide little support for claims made by the South African Institute of Chartered Accountants, the chartered accountant’s regulatory body, that chartered accountants can help companies to avoid tax to increase profits. This may sway society’s view of the chartered accountant and their role in the South African economy. https://sajs.co.za/article/view/15549corporate tax avoidancechartered accountantschief executive officerseffective tax rates |
| spellingShingle | Pieter van der Spuy Phillip de Jager Corporate tax avoidance: Is South African society negatively affected by chartered accountant CEOs? South African Journal of Science corporate tax avoidance chartered accountants chief executive officers effective tax rates |
| title | Corporate tax avoidance: Is South African society negatively affected by chartered accountant CEOs? |
| title_full | Corporate tax avoidance: Is South African society negatively affected by chartered accountant CEOs? |
| title_fullStr | Corporate tax avoidance: Is South African society negatively affected by chartered accountant CEOs? |
| title_full_unstemmed | Corporate tax avoidance: Is South African society negatively affected by chartered accountant CEOs? |
| title_short | Corporate tax avoidance: Is South African society negatively affected by chartered accountant CEOs? |
| title_sort | corporate tax avoidance is south african society negatively affected by chartered accountant ceos |
| topic | corporate tax avoidance chartered accountants chief executive officers effective tax rates |
| url | https://sajs.co.za/article/view/15549 |
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