Abstract
This paper investigates the liaison between taxation and corporate governance issues of listed multinational firms and the core characteristics of their boards’ functioning. The aim is to capture the determinant factors of board independency of listed firms as well as taxation, through a multiple regression analysis. For this reason, two models are examined, in order to get the impact of financial and non-financial factors in board independence and taxation, such as the number of directors and/or managers, the number of recorded shareholders and subsidiaries. In order to confirm results, taxation, as a compulsory expense, is examined so as to identify whether and in what extent impacts to board independency. Corporate governance indicators are also used as financial factors that relate directly with the viability and efficiency of a firm. The sample data is comprised of 918 listed European companies, over the period 2006–2015. Country determinant, as a supportive element in this research, enhances understanding of the core topic, that of board independency and taxation. Results are very promising regarding corporate governance practices, implemented by sample firms, providing at the same time evidence about their corporate profile and the possibility of overtrading.
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Notes
Large and very large companies are few in number and usually spread across different sectors. Each large and very large firm is nearly unique. In terms of definition, large companies employ more than 250 employees and records Revenues over €50 mil. or Total Assets over € 43 mil. Compliance with the criterion of the number of employees is compulsory in order for the firm to be considered a large one. However, a large firm may choose to meet either the criterion of Turnover or Total Assets. It does not need to meet both requirements and may exceed one of them without affecting its status.
ROE equals Net income before tax to Average shareholder's equity.
Solvency Ratio equals Total Liabilities to Shareholders' Equity or alternatively Total Debt to Total Assets.
Lyroudi and Lazaridis (2000) found that there is a significant positive relationship, between the cash conversion cycle and the traditional liquidity measures. Even though that in current study we are focusing on food industry as they did, still this is a representative study supporting the good performance of Greek Food Industry (either small or large).
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Zopounidis, C., Floros, C., Lemonakis, C. et al. Taxation avoidance in overtrading firms as determinants of board independence (BvD). Oper Res Int J 20, 1189–1204 (2020). https://doi.org/10.1007/s12351-018-0389-y
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DOI: https://doi.org/10.1007/s12351-018-0389-y