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Theoretical Framework Of Agency Theory

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- Theoretical Framework
The theoretical framework of this study is premised on the agency theory (AGT) propounded by Jensen and Meckling (1976). AGT emphasizes the agency problems arising from the separation of ownership and control. AGTemphasized the connection between providers of corporate finances and those entrusted to manage the affairs of the firm. According to Jensen and Meckling (1976), agency relationship in terms of “a contract under which one or more persons (the principals) engage another person (the agent) to perform some service on their behalf which involves the delegation and concentration of control on the board of directors (agent)” (as cited in Lanis & Richardson, 2011). Furthermore, AGT explained the variations in decisions; …show more content…

For instance, Salihu, Obid & Annuar (2014) study appraised the influence of substantial government ownership on corporate tax avoidance. The data for the investigation emanated from the top 100 Malaysian forms over a three-year financial period. The results of the system GMM estimation of the dynamic panel data models using four similar measures of tax avoidance revealed an inconclusive finding. The connection between government ownership and corporate tax avoidance is documented for only two of the measures. A further qualitative enquiry through personal interview sessions with ten tax auditors revealed a similar inconclusive …show more content…

This study was based on the analysis of a sample of 73 French firms on the SBF 120 index for the period 2006-2010. The study utilized regression analysis in order to explore which variables that can reduce tax aggressiveness. Variables of board size, board diversity, return on assets and size of the firm were employed. The results revealed that board size and the percentage of women in the board influence the activity of tax aggressiveness. However, return on assets and size of the firm is significantly and positively associated with tax aggressiveness.
Zarai (2013) study provided a wide-range investigation, by establishing a link between corporate tax planning and debt endogeneity. This study proposed a tax framework for studying debt endogeneity. Using a sample of standard and poor (S&P) 500 firms, the results of the simultaneous equation demonstrated that leverage; return on assets and net operating loss are the main factors determining corporate tax

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