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Top management team heterogeneity, governance changes and book-tax differences

Top management team heterogeneity, governance changes and book-tax differences
Top management team heterogeneity, governance changes and book-tax differences
Book-tax differences (BTD) explain the differences between accounting and tax incomes. This study examines the extent to which the heterogeneity of the top management team (TMT) can explain a firm’s BTD level with a specific focus on the effect of the 2012 changes in the Malaysian corporate governance regulations. Within the TMT’s strategic and social contexts, age, tenure, education and gender heterogeneities are hypothesised to have significant relationships with the firm’s BTD level. Psychologically and socially inspired-upper echelons theory underpins the hypotheses development. Using a sample of Bursa Malaysia listed firms for the eight-year period from 2008 to 2015, the findings suggest significant relationships between BTD and heterogeneity in age, tenure and education. The relationship between age and tenure heterogeneity is attributed to the subsample period prior to the change in the corporate governance regulations. The low heterogeneity subsample is the source of the observed relationship between BTD and heterogeneity in education. This study contributes to the existing literature and practice by providing new evidence to support psychologically and socially inspired-upper echelons theory in explaining the effect that TMT heterogeneity has on a firm’s BTD level. This study also provides new insights on financial reporting and taxation from a governance perspective.
top management team, heterogeneity, book-tax difference, Psychologically and socially inspired-upper echelons theory
1061-9518
30-46
Abdul Wahab, Nor
6f9e929b-e25f-482e-8452-491c40e6685a
Ntim, Collins
1f344edc-8005-4e96-8972-d56c4dade46b
Adnan, Mohd Muttaqin Mohd
47ce2097-9929-4abc-88cf-e9a48fe47319
Ling, Tye Wei
042027a6-1797-4562-aa7d-fca3c99c5820
Abdul Wahab, Nor
6f9e929b-e25f-482e-8452-491c40e6685a
Ntim, Collins
1f344edc-8005-4e96-8972-d56c4dade46b
Adnan, Mohd Muttaqin Mohd
47ce2097-9929-4abc-88cf-e9a48fe47319
Ling, Tye Wei
042027a6-1797-4562-aa7d-fca3c99c5820

Abdul Wahab, Nor, Ntim, Collins, Adnan, Mohd Muttaqin Mohd and Ling, Tye Wei (2018) Top management team heterogeneity, governance changes and book-tax differences. Journal of International Accounting Auditing and Taxation, 32, 30-46. (doi:10.1016/j.intaccaudtax.2018.07.002).

Record type: Article

Abstract

Book-tax differences (BTD) explain the differences between accounting and tax incomes. This study examines the extent to which the heterogeneity of the top management team (TMT) can explain a firm’s BTD level with a specific focus on the effect of the 2012 changes in the Malaysian corporate governance regulations. Within the TMT’s strategic and social contexts, age, tenure, education and gender heterogeneities are hypothesised to have significant relationships with the firm’s BTD level. Psychologically and socially inspired-upper echelons theory underpins the hypotheses development. Using a sample of Bursa Malaysia listed firms for the eight-year period from 2008 to 2015, the findings suggest significant relationships between BTD and heterogeneity in age, tenure and education. The relationship between age and tenure heterogeneity is attributed to the subsample period prior to the change in the corporate governance regulations. The low heterogeneity subsample is the source of the observed relationship between BTD and heterogeneity in education. This study contributes to the existing literature and practice by providing new evidence to support psychologically and socially inspired-upper echelons theory in explaining the effect that TMT heterogeneity has on a firm’s BTD level. This study also provides new insights on financial reporting and taxation from a governance perspective.

Text
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More information

Accepted/In Press date: 24 July 2018
e-pub ahead of print date: 3 August 2018
Published date: 22 September 2018
Keywords: top management team, heterogeneity, book-tax difference, Psychologically and socially inspired-upper echelons theory

Identifiers

Local EPrints ID: 422675
URI: https://eprints.soton.ac.uk/id/eprint/422675
ISSN: 1061-9518
PURE UUID: 666d2e08-0a8c-4217-af31-1f130086d324
ORCID for Collins Ntim: ORCID iD orcid.org/0000-0002-1042-4056

Catalogue record

Date deposited: 30 Jul 2018 16:30
Last modified: 14 Mar 2019 02:00

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