Moderating Effects of Board of Directors on the Relationship between Tax Planning and Bank Performance: Evidence from Tunisia

Abstract

This paper contributes to the banking literature by investigating the moderating effects of two sources of the monitoring board (board size and independent outside directors) on the relationship between tax planning and bank performance. We propose that these monitors can affect either the form or the strength of the relationship between tax planning and performance. Our empirical investigation uses a sample of 18 Tunisian banks during the period 2000-2011 and various statistical tools including panel data techniques. Results showed that while board size moderate the form of the tax planning-performance relationship, independent outside directors influence the strength of that relationship. Its findings have direct policy relevance for investors and tax administrations in monitoring and controlling banks' tax planning activities.

Keywords: tax planning, bank performance, board of directors, moderating variables