Effect of Audit Committee on Tax Aggressiveness: French Evidence

This study investigates the effect of audit committee characteristics on the level of tax aggressiveness. Drawing on a sample of 72 French listed firms from the SBF120 index for the period from 2015 to 2022, this study measures the level of tax aggressiveness through the effective tax rate (cash ETR). The descriptive statistics, correlation matrix, variance inflation factor (VIF), and feasible generalized least squares (FGLS) regression were used for analysis of panel data. The findings reveal that measures of the independence of the audit committee, expertise of the audit committee, and audit committee size are significantly linked to tax aggressiveness. The findings also highlighted that the frequency of audit committee meetings is weakly linked to tax aggressiveness. The effectiveness of audit committee members can send a strong signal to the tax authorities, the shareholders, regulators, and the investors who are concerned about the risk of tax aggressiveness. This study contributes to the existing literature aimed at exploring the effect of audit committee characteristics on tax aggressiveness in a French context. This study has several implications for regulators, policymakers, and academia. It helps the policymakers and regulators in policy reforms who aim at combating aggressive tax practices in France, which is one of the primary objectives within the European Union (EU) framework.