Ownership Structure and Tax Avoidance

This study investigates the influence of ownership structure on tax avoidance among publicly listed firms. Despite growing scholarly interest in corporate tax behavior, the role of ownership structure as a determinant of tax avoidance remains inadequately explored, particularly in emerging markets where governance frameworks differ markedly from developed economies. The purpose of this study is to examine how different forms of ownership—managerial, institutional, foreign, and concentrated ownership—affect firms' engagement in tax avoidance strategies. Using a panel dataset of listed companies spanning the period 2014–2023, the study employs panel regression techniques, specifically a random effects model, to analyze the relationship between ownership types and effective tax rates, a proxy for tax avoidance. Robustness checks are conducted using alternative tax avoidance measures and controlling for firm-specific variables such as profitability, leverage, firm size, and industry effects. The findings reveal that managerial and foreign ownership are negatively associated with tax avoidance, suggesting that these ownership types may enhance transparency and curb aggressive tax behavior. Conversely, institutional ownership shows a positive relationship with tax avoidance, indicating a potential misalignment of interests by controlling institutional owners. However, ownership concentration is not significant with tax avoidance. The study contributes to the literature by offering empirical evidence from an under-researched context and highlighting ownership structure as a critical governance mechanism influencing corporate tax decisions. The results have practical implications for policymakers, investors, and regulators seeking to promote tax compliance through improved corporate governance. However, the study is limited by its reliance on secondary data and the potential for omitted variable bias. Future research could explore moderating factors such as audit quality or board characteristics. The originality of this research lies in its comprehensive analysis of multiple ownership dimensions and their distinct effects on tax avoidance, offering nuanced insights into how ownership dynamics shape corporate fiscal behavior in emerging markets.