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27 Austl. Tax F. 941 (2012)
Influence of Ownership Structure and Corporate Governance on Effective Tax Rates and Tax Planning: Malaysian Evidence

handle is hein.journals/austraxrum27 and id is 947 raw text is: Influence of ownership structure and corporate governance on effective tax rates and tax planning: Malaysian evidence Sakthi Mahenthiran* and Jeyapalan Kasipillai** Abstract The effective tax rate (ETR) may be used to measure the impact of changes in a country's tax policy on a company's tax burden. Our study examines if the ownership structure and the firm's corporate governance mechanisms affects the ETRs and the tax planning of Malaysian public listed companies (PLCs). Using a sample of 345 PLCs, we find that government ownership, management power, and total accruals are important determinants of companies ETRs. Additionally, the results show that companies that mitigate the agency conflicts with lower total accruals are more likely to have lower ETRs, and executive compensation is a good predictor of long-term tax planning by PLCs. Although preferential tax treatments for certain industries like tourism and manufacturing help lower ETRs, our findings suggest industry firm size is related to ETR and it is a political asset that helps to maximize the country's wealth. Keyword: Tax Policy, Tax Planning, Effective Tax Rate, Corporate Governance * Butler University, USA. ** Professor, Monash University Sunway Campus and Adjunct Senior Fellow, Taxation Law and Policy Research Institute, Monash University, Melbourne. The authors would like to thank the participants of the 2011 American Accounting National Meeting- Taxation Section and Professor Bin Srinidhi of City University, Hong Kong for their invaluable comments, and Monash University Sunway Campus for the financial support to conduct this research. This paper was accepted for publication on 23 July 2012. 941