Corporate Business Strategy and Tax Avoidance Culture: Moderating Role of Gender Diversity in an Emerging Economy

Xiaochen Zhang; Muhammad Husnain; Hailan Yang; Saif Ullah; Jaffar Abbas; Ruilian Zhang

doi:10.3389/fpsyg.2022.827553

Corporate Business Strategy and Tax Avoidance Culture: Moderating Role of Gender Diversity in an Emerging Economy

Front Psychol. 2022 May 27:13:827553. doi: 10.3389/fpsyg.2022.827553. eCollection 2022.

Authors

Xiaochen Zhang^{1

2}, Muhammad Husnain³, Hailan Yang⁴, Saif Ullah⁵, Jaffar Abbas^{6

7}, Ruilian Zhang⁸

Affiliations

¹ Business School, Hohai University, Nanjing, China.
² Research Center of Social Risk Assessment, School of Public Administration, Hohai University, Nanjing, China.
³ Department of Business Administration, University of Sahiwal, Sahiwal, Pakistan.
⁴ Business School, Shandong Jianzhu University, Jinan, China.
⁵ Lahore Business School, University of Lahore, Lahore, Pakistan.
⁶ School of Media and Communication, Shanghai Jiao Tong University, Shanghai, China.
⁷ Antai College of Economics and Management, Shanghai Jiao Tong University, Shanghai, China.
⁸ Centre for Social Responsibility in Mining, Sustainable Minerals Institute (SMI), University of Queensland, Brisbane, QLD, Australia.

Abstract

Tax payments stimulate business enterprises to choose tax management through tax avoidance activities, which is the legal practice to reduce the amount of tax payable. In developing economies, taxation is considered more critical for budget and revenues of a country. This paper investigates whether various business strategies influence corporate tax avoidance decisions of firms by adopting business strategies. Besides, it explores how gender diversity can ease this relationship. This study has chosen a sample of organizations from non-financial sector in Pakistan. The time frame is 5 years, including once a year. The present model employed a generalized moment method (GMM) and tested the proposed hypothesis to draw the results. The study has taken the size, leverage, and business profitability as control variables of firms. The study outcomes by using the GMM method demonstrate that the presence of female directors reduces tax avoidance behavior in prospector companies. This study provides insight into future research for stakeholders, government officials, tax authorities, and policymakers. The findings offer valuable recommendations and practical insights and implications. The findings provide future directions for research to test different frameworks to attain beneficial results to promote the responsibility of tax payment culture.

Keywords: GMM model; business strategy; gender diversity; tax avoidance; tax management.