The Relation Between Firm Value, Business Strategy, Ownership Structure and Tax Avoidance In Pakistan: Mini-Review

Economics

Most of the time companies tend to indulge in tax avoidance activities to refrain from paying taxes and escalate their after-tax income. Tax avoidance has become a hot topic in the media as well as for academic discussion because taxes are extremely important for budgeting and revenue generation for developing countries like Pakistan. Hence the goal of this review is to compile and analyze corporate governance strategies in relation to tax avoidance in order to provide policymakers, organizations, and governments with data to help eliminate such activities. Based on previous researches conducted and further analysis it has been found that having a higher number of independent directors on the board will bring a reduction in tax avoidance. Firm value and tax avoidance have a negative relationship that can be mitigated by corporate governance. Furthermore, tax payment and business strategy have a negative relationship too, suggesting that prospectors-type strategies are more prone to be indulged in tax avoidance.

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