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Tax planning and directors' remuneration

Record type: Conference or Workshop Item (Paper)

Companies involve in tax planning due to its primary benefit of increase aftertax return. However, this activity has been an ongoing discussion as it impairs provision of public goods which indirectly causes social issues. Companies, in conducting tax planning, make use of several techniques to effectively minimise the tax burden, for example, profit sharing, income shifting and change of characteristics of income. Directors’ remuneration is also identified as a tax-reduction strategy. While increasing the wealth of the directors, higher directors’ remuneration expense reduces company taxable income and in turn raises company tax savings. This provides indications about missing link between directors’ performance and pay. In fact, in Malaysia, this issue has been long debated by public including academics. Despite this highlight, little attention has been given on the relationship between tax planning and directors’ remuneration. Therefore, this paper reports the results of this study’s focus of attention on whether tax planning activity is significantly related to directors’ remuneration expenses of non-financial Malaysian publiclisted companies. The sample period of the study is from 2007 to 2009. The panel dataset is drawn from Datastream and hand-collected tax data from company annual reports. The results derive from multivariate analyses highlight the extent of the relationship between tax planning and directors’ remuneration and thus enlighten the knowledge on the utilisation of directors’ remuneration as a strategy in tax planning. The results also highlight the policy and reporting implications to the authority

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Citation

Abdul Wahab, Nor Shaipah, Derashid, Chek and Che Pak, Nur Azliani (2011) Tax planning and directors' remuneration In Proceedings of the International Conference on Management. International Conference on Management., p. 389.

More information

Published date: 2011
Venue - Dates: International Conference on Management (ICM 2011), Malaysia, 2011-06-13 - 2011-06-14
Organisations: Centre of Excellence in Decision, Analytics & Risk Research

Identifiers

Local EPrints ID: 333544
URI: http://eprints.soton.ac.uk/id/eprint/333544
ISBN: 978-967-5705-03-8
PURE UUID: 96e34973-24bb-4891-9649-0ad60432a23b

Catalogue record

Date deposited: 07 Mar 2012 14:31
Last modified: 18 Jul 2017 06:12

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Contributors

Author: Nor Shaipah Abdul Wahab
Author: Chek Derashid
Author: Nur Azliani Che Pak

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