Female audit committee and tax avoidance with moderating role of COVID-19: evidence from the UK

Purpose This study aims to investigate the effect of female audit committees (ACs) on tax avoidance in the UK. Besides, it examines how COVID-19 moderates the link between female AC and tax avoidance. Design/methodology/approach The analysis is based on 1,925 observations from non-financial firms listed in the UK, covering the period from 2012 to 2022. Both static and dynamic panel regression models were used. Findings The findings provide a negative relationship between female AC and tax avoidance, strengthening the views on the impact of diverse gender in enhancing monitoring and promoting ethical standards. However, the study also reveals that the effectiveness of female AC in reducing tax avoidance diminished during the COVID-19 pandemic, likely owing to increased financial pressures and regulatory uncertainties. GMM analysis further affirmed the validity of these findings. Interestingly, the influence of female AC is more pronounced in smaller firms. Practical implications In particular, for the policymakers and the regulators, the encouragement of female AC can be one of the most effective ways to stop aggressive tax avoidance. Nevertheless, as long as the gender-diverse committees established at present exhibit lower efficiency in the wake of the COVID-19 pandemic, flexible governance structures are needed to sustain consistent supervision and ethics in all possible conditions internationally. Originality/value This research is relevant to the existing body of knowledge, as it establishes a concurrent relationship between gender diversity in audit committees and tax avoidance. It shows how the effects of female AC vary depending on the size of the firm and during unpredictable times.