The power of good corporate governance in activating the impact of internal information quality on tax savings
Abstract
Purpose
This paper examines the moderating effect of good corporate governance on the association between internal information quality and tax savings.
Design/methodology/approach
This study uses a quantitative approach. It employs an Australian sample of analysis composed of 1,295 firm-year observations from the period 2017 to 2021. Data relating to corporate governance are hand-collected from the annual reports.
Findings
Based on the result of the analysis, this study demonstrates that the interaction between corporate governance and quality of internal information is positively associated with tax savings. Superior corporate governance is critical in activating the effect of internal information quality on tax savings. This finding is robust to a battery of robustness checks and additional tests.
Research limitations/implications
This examination utilizes only publicly traded companies from one developed country.
Practical implications
For the company management, an effective governance structure must be at the top because it will determine the development of all other areas. This study emphasizes the need to continuously improve the effectiveness of corporate governance practices. For long-term investors, an important indicator that can be considered in assessing the “safety” of a company’s tax strategy is its corporate governance aspects. For regulators, this study is expected to assist regulators in creating a more adequate corporate governance implementation and disclosure package to be implemented by corporations in the future.
Originality/value
This study provides new evidence on a crucial construct that can strengthen the relationship between internal information quality and tax savings.
Keywords
Acknowledgements
The author would like to thank the Senior Editors (Professor Tom Smith and Professor Martina Linnenluecke) and the Associate Editor (Dr Adrian Gepp) for the valuable opportunity. The author thanks and values the appreciations, comments, as well as the feedback provided by the anonymous reviewer. The author would also like to express her gratitude to Mr Prof. Syaiful Ali, MIS, PhD for his superior encouragement and support, generous assistance, initial reading and invaluable comments on an earlier version of this manuscript. Finally, the author does extend her gratitude to her beloved parents, Mrs Radhiah Sinuhaji and Mr Marzuki Saragih, for their superior encouragement.
Citation
Saragih, A.H. (2024), "The power of good corporate governance in activating the impact of internal information quality on tax savings", Journal of Accounting Literature, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JAL-11-2023-0198
Publisher
:Emerald Publishing Limited
Copyright © 2024, Emerald Publishing Limited