Gender diversity in corporate boardroom and tax avoidance the evidence in hose listed firms

i HO CHI MINH CITY INSTITUTE OF SOCIAL STUDIES VIETNAM – THE NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS GENDER DIVERSITY IN CORPORATE BOARDROOM AND TAX AVOIDANCE THE EVID

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HO CHI MINH CITY INSTITUTE OF SOCIAL STUDIES

VIETNAM – THE NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS

GENDER DIVERSITY IN CORPORATE BOARDROOM

AND TAX AVOIDANCE THE EVIDENCE IN HOSE LISTED FIRMS

BY

DAO THI HAN

MASTER OF ARTS IN DEVELOPMENT ECONOMICS

HO CHI MINH CITY, December 2016

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HO CHI MINH CITY INSTITUTE OF SOCIAL STUDIES

VIETNAM – THE NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS

GENDER DIVERSITY IN CORPORATE BOARDROOM

AND TAX AVOIDANCE THE EVIDENCE IN HOSE LISTED FIRMS

A thesis submitted in partial fulfilment of the requirements for the degree of

MASTER OF ARTS IN DEVELOPMENT ECONOMICS

BY

DAO THI HAN

Academic Supervisor:

Nguyen Thi Thuy Linh

HO CHI MINH CITY, December 2016

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ABSTRACT

Using data set of 296 publicly listed firms in Ho Chi Minh Stock Exchange from 2010 to

2015, the study analyses the engagement of female board members, also in case of being leader

of board and executive manager, on tax avoidance activities, measured by three proxies The fixed effect regression results indicate gender diversity in boardroom is negatively associated with tax avoidance measured by effective tax rate but chairwomen are more engaged in tax avoidance measured by book-tax difference As a result, the presence of women in boardroom of HOSE listed firms is important to shareholders who consider about firms’ transparency or profit

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TABLE OF CONTENT

LIST OF ABBREVIATIONS iv

LIST OF FIGURE v

LIST OF TABLE vi

CHAPTER ONE INTRODUCTION 1

1.1 Vietnam overview 1

1.1.1 Female labor and pay gap in Vietnam 1

1.1.2 Women participation in firm management in Vietnam 2

1.1.3 Tax avoidance in Vietnam 3

1.2 Research objective 6

1.3 Research design 7

CHAPTER TWO LITERATURE REVIEW 9

2.1 Gender diversity and corporate governance 9

2.1.1 Resource-dependence theory 11

2.1.2 Agency theory 11

2.1.3 Gender equality reaction in corporate boardroom 12

2.2 Tax avoidance and corporate governance 13

2.2.1 Tax avoidance 13

2.2.2 Tax avoidance and corporate governance 14

2.3 Gender diversity in boardroom and tax avoidance 15

2.3.1 Women’ participation in boardroom and tax avoidance 16

2.3.2 Chairwomen and tax avoidance 17

2.3.3 Female executive in boardroom and tax avoidance 18

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2.3.4 Summary 19

CHAPTER THREE METHODOLOGY 20

3.1 Analytical framework 20

3.2 Data and data source 20

3.3 Research model 21

3.3.1 Baseline model 21

3.3.2 Variable explanation 23

3.4 Research methodology 26

3.4.1 Regression models 26

3.4.2 Robust standard Errors 27

CHAPTER FOUR EMPIRICAL RESULT 28

4.1 Descriptive statistic 28

4.1.1 Summary descriptive statistic 28

4.1.2 Women board directors in HOSE listed firms 30

4.1.3 Tax expense in HOSE listed firms having women board directors 32

4.2 Empirical result 33

4.2.1 GAAP effective tax rate 34

4.2.2 CASH effective tax rate 35

4.2.3 Book-tax differences 37

4.3 Summary results 38

CHAPTER FIVE CONCLUSION 40

4.1 Conclusions 40

4.2 Implications 41

4.3 Limitations 41

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REFERRENCE 43

APPENDIX A SELECTED FIRMS LISTED IN HOSE 48

APPENDIX B CORRELATION MATRIX 50

APPENDIX C MULTICOLLINEARITY TEST 52

APPENDIX D PANEL DATA REGRESSION RESULTS – FEM 54

APPENDIX E PANEL DATA REGRESSION RESULTS – REM 59

APPENDIX F HETEROSKEDASTICITY AND AUTOCORRELATION TEST 64

APPENDIX G REGRESSION WITH ADJUSTED STANDARD ERRORS 66

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LIST OF ABBREVIATIONS

BTD: book-tax different

CEO(s): Chief of Executive officer(s)

CFO(s): Chief of Finance officer(s)

CIT: Corporate Income Tax

ETR: effective tax rate

EU: European Union

FDI: Foreign directed investment

FEM: Fixed effect model

GAAP: Generally Accepted Accounting Principle

GSO: General Statistics Office

HNX: Hanoi Stock Exchange

HOSE: Ho Chi Minh Stock Exchange

ILO: International Labor Organization

OECD: Organization for Economic Co-operation and Development REM: Random effect model

ROA: Return on asset

ROE: Return on equity

ROI: Return on investment

SG&A: Selling, general and administration

VAT: Value-added tax

VCCI: Vietnam Chamber of Commerce and Industry

VWEC: Vietnam Women Entrepreneurs Council

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LIST OF FIGURE

FIGURE 1.1LABOR FORCE PARTICIPATION RATES (%) 1

FIGURE 1.2:NATIONWIDE FEMALE EMPLOYED POPULATION 2

FIGURE 2.1:THE SCOPE OF CORPORATE GOVERNANCE 10

FIGURE 3.1:ANALYTICAL FRAMEWORK 20

FIGURE 4.1:GRAPH HISTOGRAM OF TAX AVOIDANCE MEASURES 28

FIGURE 4.2:GRAPH HISTOGRAM OF CORPORATE BOARD SIZE AND WOMEN MEMBERS 30

FIGURE 4.3:HOSE LISTED FIRMS HAVING WOMEN PARTICIPATING BOARDROOM 31

FIGURE 4.4:NUMBER OF EXECUTIVE AND NON-EXECUTIVE FEMALE BOARD DIRECTOR 32

FIGURE 4.5:CURRENT TAX EXPENSE IN HOSE LISTED FIRMS (BILLION VND) 32

FIGURE 4.6:CASH TAX PAID IN FIRMS IN HOSE LISTED FIRMS (BILLION VND) 33

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LIST OF TABLE

TABLE 1.1:CORPORATE INCOME TAX SINCE 2013 4

TABLE 2.1:SUMMARY HYPOTHESES AND RESEARCH QUESTIONS 19

TABLE 3.1:VARIABLE CONSTRUCTION 21

TABLE 3.2:EXPLANATORY VARIABLES 22

TABLE 4.1:SUMMARY STATISTICS OF VARIABLES 29

TABLE 4.2:RESULTS OF FEM WITH TAX AVOIDANCE MEASURED BY GAAPETR 34

TABLE 4.3:RESULTS OF FEM WITH TAX AVOIDANCE MEASURED BY CASHETR 36

TABLE 4.4:RESULTS OF FEM WITH TAX AVOIDANCE MEASURED BY BTD 37

TABLE 4.5:SUMMARY HYPOTHESIS TEST RESULTS 39

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CHAPTER ONE INTRODUCTION 1.1 Vietnam overview

1.1.1 Female labor and pay gap in Vietnam

According to Worldbank data, Vietnam keeps a very high female labor participation rate

as high as male’s, not lower than 72 percent since 2000, shown in Figure 1.1 (while male rate is around 82 percent)1 General Statistics Office (GSO) of Vietnam also reports more than 40 percent of the nationwide labor force are women (see Figure 1.2) However, the International Labor Organization (ILO) identifies that gender pay gap in Vietnam has been widened Vietnamese women earn less than men thirteen percent in 2011 and twenty to thirty percent in

2012 while global average gender pay gap is around 17 percent The latest Labor Force Survey Report (2012) shows that women earn less than male counterparts in all economic sectors, even the favor-female industries like healthcare, social works Hence, the remuneration seems to reflect gender of worker instead of content of work It is clear that the principle of “equal pay for work of equal value” stipulated in the Labor Code need to be implemented

Figure 1.1 Labor force participation rates (%)

1.1.2 Women participation in firm management in Vietnam

Some representatives of richest and most powerful women in stock market like Ms Truong Thi Le Khanh (chairwoman cum CEO of Vinh Hoan Company), Ms Pham Thu Huong,

Ms Pham Thuy Hang (vice presidents of Vingroup), and Ms Mai Kieu Lien (chairwoman cum CEO of Vinamilk)… are holding important positions in large corporates However, the more opportunities women have in career, the more obstacles and pressures women have Participating

in the political or economic activities creates pressure of making decision, influencing male employees, satisfying clients…to women Besides, they have to carry out the housewife responsibility with children, husband and her family Moreover, the expectation to be

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outstanding in appearance, knowledge or behavior is the other pressure to female leaders Certainly, the long-time process to shorten the gender gap needs efforts of not only trade unions, social organization but also, and most important, female workers themselves to access education, improve skills and overcome glass ceiling2

Internationally, the ILO has worked closely with internal organizations, like Vietnam Chamber of Commerce and Industry (VCCI), to create jobs and reduce poverty Under the valuable support of the ILO, women’s economic empowerment is promoted and starts to be guided legally Some legal tools favor gender equity like Gender Equity Law (2007), the Directive No 10/2007/CT-TTg of Prime Minister, Decree No 90/2001/ND-CP (2001) and Resolution 11/NQ/TW on “Policy for women in the period of industrialization and Modernization” (2007) Moreover, Vietnam takes part in global/regional conferences about women to discuss and learn to encourage the engagement and contribution of women in social and economic life Recently, in the Global Summit of Woman in 2016, an international forum for women founded in 1990, one of the four breakout sessions of leadership development is

“Women on Boards Roundtable: How female board members can drive value and results” Generally, it is essential to perceive that women prefer to be appointed as leader in business or politics on merit, not in condition of elimination discrimination Correspondingly, Shoko Ishikawa, Country Representative for United Nations Women in Vietnam, has added on Worldbank news: "We need to highlight role models and positive images of female leaders, and highlight women’s roles in non-traditional jobs such as business leaders, scientists, architects so that we can change perceptions on tasks that women can take on."

1.1.3 Tax avoidance in Vietnam

In recent years, Vietnam General Department of taxation has improved in policies and procedures that impact positively on the business community From 2014 to 2016, the tax declaration and administrative procedures have been simplified gradually to reduce compliance cost and time for business entities The tax sector has enacted many tax regulations of Government and the Ministry of Finance like Circular No 92, 96, 110 and 127/2015/TT-BTC and Resolution 19 and 35 on tax administrative simplification and preparing for electronic tax

2 Glass ceiling is invisible but real barrier prevent qualified and deserving employees developed, normally causes by age, ethnicity, political or religious affiliation, and/or sex

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declaration Moreover, increasing number of enterprises and enterprises’ competitiveness with reasonable tax rates also helps to acquire capital and ensuring State budget from domestic income sources

Accordingly, the General Department of Taxation will implement some measures to expand the tax base A single rate of VAT is one proposal of tax reform Besides, revenue from land and properties on land has been considered as an important source of State budget in future Especially, in order to ensure the equality for both domestic and foreign business entities, the tax service has proposed a lower corporate income tax and improving legal framework for transfer prices enforcement

Table 1.1: Corporate income tax since 2013

Before 01 July, 2013

All firms excluding below list 25% Circular

BTC issued on

123/2012/TT-27 July, 2012

Exploration and exploitation oil and gas operations in Vietnam

50%

32%-Exploration and exploitation valuable resources operations Vietnam (exclude oil and gas)

141/2013/TT-16 October,

2013

Firms’ revenue from VND 20 billion 25%

New established firms since 01 July, 2013 (excluding tax-favored list) 25%

From 01 January, 2014

Firms’ revenue less than VND 20 billion 20% Circular

BTC issued on

78/2014/TT-18 June, 2014

Firms’ revenue from VND 20 billion 22%

New established firms less than 12 months (excluding tax-favored list) 22%

From 01 January, 2016 All firms (excluding tax-favored list) 20%

Circular 96/2015/TT-BTC issued on

25 June, 2015

(Source: the author summarized from gdt.gov.vn)

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Corporate income tax (CIT) has been adjusted several times since 2013 as shown in Table 1.1 Although the CIT has been dropped 3 percent since 2013 to 2015, many experts agree that total tax expenses that companies must pay are considered very high compared to neighborhood One of the reasons is Worldbank’s survey results show that Vietnamese business entities have to pay 39.4 to 40 percent of profit for taxes and fees, which includes CIT, land tax, health and social insurance for labors The results point out a big gap in taxes and fees in Vietnam and Indonesia (29.7 percent), Thailand (27.5 percent), Cambodia (21 percent), and Singapore (18.4 percent) Therefore, another proposal to reduce CIT at 17% has been prepared to send to National Assembly in 2017

Tax and transfer pricing audits are conducted in large provinces and cities including Hanoi, Ho Chi Minh, Binh Duong, Lam Dong, Thanh Hoa, Quang Ninh, Bac Ninh, Khanh Hoa,

An Giang, Vinh Phuc, Ba Ria-Vung Tau, Gia Lai and Ha Tinh…In 2012, 7,800 companies with related party transactions were targeted in transfer pricing inspection, especially foreign-invested companies In 2014, after an investigation in 870 foreign firms nationwide, tax authorities found that 720 cases engaged in tax fraud Pay back taxes and penalties are nearly VND 400 billion (equal to US$ 19 million) (Vu et al., 2014) Similar to previous reports, the profit shifting is found in higher price for purchase of tangible transactions (materials, machinery and equipment) and lower selling price of finish goods Moreover, those foreign firms have been paying very high cost for technology transfer and trademark fees Especially services and consumer product sectors pay overvalue of royalties for parent companies However, monitoring every purchase and sales evidence of those multinational corporations is very difficult even though tax regulations have allowed valid invoice and inter-company agreements as supporting for corporate income tax and valued added tax

Since 2011, the conference transfer pricing enforcement efforts has agreed to build a specialized transfer pricing team to administer the transfer pricing compliance of taxpayers in Ho Chi Minh City Later, large provinces are also expected establish a specialized transfer pricing team Moreover, period from 2012-2013, the EU Commission combined with the OECD and World Bank have implemented the EU project which aims to assist Vietnam to focus on transfer pricing by improving the tax regulations and tax The project equipped tax officer knowledge, tools and practical skills to implement and enforce Vietnamese transfer pricing regulations

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efficiently On 21 May 2012, Vietnam's Ministry of Finance issued Decision No 1250/QD-BTC approving the National Action Plan for 2012-2015 related to tax avoidance, generally and transfer price, specially

1.2 Research objective

Many regulatory framework, technology, administrative procedure and tax policy… have been improved to facilitate developing healthy business environment The stock market as the channel for raising medium and long term capital has received a lot of changes for improvement

By the end of 2015, market capitalization achieved over 1298.53 trillion, with 1146.9 trillion in

Ho Chi Minh Stock market (HOSE) and more than 151.6 trillion in Hanoi Stock Market (HNX)3

In particular, VN-index in HOSE increased 4.13 percent with 28 billion shares among 39.7 billion shares in the market From 2016 to 2020, about 500 state firms are completing the equalization which offer more options for investors and increase the market capital Thus, it is a must to have a transparency, professional and equality for investors and organizations

Furthermore, the tax sector recently examined tax evasion in FDI enterprises as the illegal tax avoidance activities However, this fraud action is applying the formula of general tax planning which increases reported expenditures to reduce reported profit and tax obligation Actually, there are some lawful forms of tax planning applied in most of the firms at any tax rate

in every country The taxpayers can conduct tax advantages by any means of legislation offers or loopholes, called broad tax avoidance (Hanlon and Heitzman, 2010) Particularly, this strategy has been considered as one of the issues of corporate governance (Tricker, 2015)

The recent economic and social condition has been changed affecting women’s participation in labor market and opportunities to have leaderships More and more involvement

in workplace, women want to achieve not only financial independence but also decision-making influences Being engaged in the tussle by men, women are forced to show how they can drive value and result for a firm as a female board member Therefore, the objective of this study is to examine the contribution of women board directors in differential features of corporate governance and social responsibility of HOSE listed firms with special emphasis on tax avoidance behavior

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To solve the above research objectives, the study will answer three questions in correspondence with three considered matters:

1 Is presence of women in boardroom associated with tax avoidance?

2 Is there any relationship between chairwoman and tax avoidance?

3 Is female executive in boardroom related to tax avoidance?

1.3 Research design

This study considers the effect of gender diversity on boardroom on corporate tax avoidance Based on the panel data of 296 firms listed in HOSE from 2010 to 2015, the study employs fixed effects regression to test the prediction that woman board director has significant association with tax avoidance

Corporate board of directors is responsive to the stakeholders’ rights and wishes, normally related to investors’ in listed firms Besides the descriptive benchmarking or questionnaire survey studies examine the influence of women presentation on board, various studies execute quantitative analysis evaluating the impact of having female directors on financial or social performance Erhard et al (2003) shows that the share of female and minorities board members is positively correlated with firm financial performance, measured as return on asset (ROA) and return on investment (ROI) Another study from Carter et al (2003) has found positive relationship between the presence of women on board in companies firm size, board size and Tobin’s Q In addition, Lückerath-Rovers (2013) suggests that the presence of women on board is an attribute of companies having better performance with higher return on equity (ROE)

The psychology and economics literatures have studied gender differences in attitudes toward risk and in risk-related behavior Most studies support the notion that women are more risk averse than men in the general population Besides, men are more overconfident than women, affecting the perception of the probability distribution underlying a risk (Huang and Kisgen, 2013) Francis et al (2014) figure female CFOs and their male counterparts engage similarly in tax avoidance Especially, the authors emphasize that the female CFOs pursue not all tax saving opportunities to avoid extra risks Moreover, although the reason behind gender effect

on tax aggressiveness is risk-aversion of female, female fund managers do not differ significantly with male in performance and investment behavior (Atkinson et al., 2003) or being the

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professional analysts with bolder and more accurate forecasts (Kumar, 2010) Hence, the

presence of women in boardroom is supposed to negative associated with tax avoidance

By using three different proxies of tax avoidance in the regression, the research implies

three different findings Generally, women’s presence in boardroom is negative associated with

tax avoidance activities by paying more cash tax expenses However, they just focus on reported

value to have high rate of book effective tax rate when holding executive positions On the other

hand, since holding leadership role of the firm, chairwomen positively associated with tax

avoidance to enhance shareholders’ benefit

The paper is arranged in five chapters The first one gives an overview of research

problem, research objectives and research question This chapter also summarize the brief data,

literature used in the research The second chapter provides some theoretical literature and prior

emprical studies related to presence of female board member and tax avoidance The next one

describes data measurement and regression models in metheodology The research results are

presented in chapter four Finally, analytical result and implication are outlined in chapter five

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CHAPTER TWO LITERATURE REVIEW 2.1 Gender diversity and corporate governance

Corporate governance is defined differently under alternative viewpoints of the subjects Most often viewed as both operational and relationship perspectives, corporate governance is determined as the procedures and processes of directing and controlling the activity and performance of an organization (Tricker, 2015) This issue particularly deals with rights and responsibilities of the board of directors and primary stakeholders Although, the board of directors is typically central to corporate governance, various stakeholders including shareholders and advisors, the important proxies, and other participants like management team, employees, customers, suppliers, etc involve in corporate governance as wider relationship perspective (Tricker, 2015)

Board of directors elected by shareholders or appointed by other board members is the primary stakeholders influencing corporate governance The boards are often comprised of insiders, founders and executives, and outsiders All important decisions such as firm management team appointments, compensations, dividend policy or even financial optimization

in some instances are board’s obligations Commonly, the roles of corporate board are examined under five theoretical perspectives: legalistic, resource-dependence, class hegemony, agency theory and resource base In spite of various assumptions of board roles, the natures of them are concluded into two main categories: service and control (Mintzberg, 1983) Besides, Huse and Rindova (2001) emphasize that various stakeholders imply different board roles, service and/or control because of different functional relationship with corporates

The Figure 2.1 summarizes all parties involved in various perspectives on corporate governance This schematic diagram is captured in the book of Trickers (2015) named Corporate Governance: Principles, Policies and Practices In the described framework, the corporate governance codes pay attention to the centralized players of board of directors, shareholders and the management Beside other parties, corporate governance of public listed firms is also significant to stock market and listed rules Some commentators and researchers widen the focus

of corporate governance to interrelations of minority shareholders, institutional investors, auditors, government and contractual stakeholders Moreover, after the bankruptcy of some high-

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profile companies such as Enron and WorldCom in the United States (U.S), or Marconi, British Rail in the United Kingdom and some other collapse in Australia, Italy, Germany in the beginning of twenty first century…, corporate governance has become a pressing issues including poor structure boards Consequently, high level of corporate governance requires transparency in rules and controls which includes incentives alignment and board compositions and how board operates Thus, it is necessary to have a diversification in the corporate board for managing and satisfying multiple stakeholder relationships

Figure 2.1: The scope of corporate governance

(Source: Corporate Governance: Principles, Policies, and Practices (3rd ed.) (Tricker, 2015))

In the increasingly complex and uncertain environment, board diversity with a combination of different qualities, characteristics and expertise of members in composition of corporate board has been advocated to increase organizational performance and decision-making (Walt and Ingley, 2003) However, a majority of studies pay more attention to observable/demographic diversity, especially the gender effect, than non-observable category, such as background or knowledge of directors (Erhardt et al., 2003) Therefore, gender diversity

is one of the categories of board diversity in corporate governance In stakeholder perspective

Government and other corporate regulators

Board of directors

Management

External auditors

Shareholders

Market intermediaries

Stock market for listed companies Finance market –

equity and debt

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(discussed above) and resource dependence theory, gender diversity connects to good relationship with stakeholders and corporate governance (Pfeffer and Salancik, 1989) Moreover, women’s presence also measures the independence advocated in agency theory which creates fair and transparent decision-making (Terjesen et al., 2009)

2.1.1 Resource-dependence theory

In resource dependence theory, good corporate governance benefits from the linkage of corporate board between internal and external resources that company depends This linkage mechanism comes up with at least four benefits for firms those are: establishing useful information, a channel for communication, a significant step to achieve commitments of support internal resources and lastly the value in organizations legitimacy Particularly, resource dependence theory suggests legitimacy effect as the consequence of gender diversity on the board because female directors highlight positive signal to other stakeholders (Pfeffer and Salancik, 1989)

Women directors are considered as the career opportunities equality for all employees In addition, more women presenting in corporate boards reflects the demographic diversity seizes firms’ reputation and social expectation (Singh, 2007) Thus, the gender diversity engages firms

in customer-oriented business and political effects Moreover, directors not only manage and convey timely information to stakeholders but also have ability to legitimate companies’ actions and mobilize external support and resources for them Thus, some stakeholders, especially shareholders, profitability is not the only characteristic of firm they focus on, but they also need firm demonstrate good corporate citizenship such as ethical behavior

Diversity might also contribute to improve team performance for sharing different range

of perspectives and contributing to the discussion, exchanging ideas (Kang et al., 2007) Structurally, gender diversity in boardroom strengthens the competitive situation inside the firm and positive attitudes from society Consequently, gender diversity in corporate boardroom enhances firm performance with linkages related resources (Carter et al., 2003, Rose, 2007)

2.1.2 Agency theory

In agency theory, the boards and managers should monitor the actions as agent on behalf

of their shareholders to maximize shareholders wealth (Huse and Rindova, 2001) This primary

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standard for evaluating corporate performance concerns two issues: the board composition and the leadership structure impacting on organization performance (Van der Walt and Ingley, 2003) Board composition from an agency perspective suggests that with a greater proportion of outside directors boards will monitor self-interested actions by managers better and will thereby minimize agency costs In this case, diversity is the measure of independence in boardroom

Moreover, separating or at least counterbalancing the role of chief executive and chairman of the board to reduce the opportunity for a powerful of minorities on decision-making processes (Walt and Ingley, 2003) Classical management theory seldom enables the board in organization chart, i.e not belongs to management structure While executive officers have authorities and responsibility distinction in line, each board director has equal responsibility, same duty and powers (Tricker, 2015) Therefore, the executive directors with managerial roles and responsibilities have superimposed the management over governance, yet governance role has become more important than management in modern business (Tricker, 2015)

Briefly, the main issue concerning agency cost is the independence of directors and the balance between executive and non-executive directors on boards Generally, both agency theory and the resource dependence view adequately take into account the key aspects of governance being the rationale for diversity in the boardroom

2.1.3 Gender equality reaction in corporate boardroom

Any diversity promotes a better understanding of the market place, increases creativity

and innovation, and effective problem solving (Carter et al., 2003) because people with different

gender, ethnicity, education or cultural background might not ask traditional questions Motivation of gender diversity firstly comes from the gender neutralization reaction for equal treatment and equal career opportunities for women contributing to organization (Villiers, 2010)

So far, Norway where successfully mandated corporates achieving legislation quota of 40 percent female in boardroom by January 2008 may become the first country gains the target rate

of female presentation on board (Hoel, 2009) In 2007, Spain issued Diversity in Corporate Governance Code which recommends a ‘balanced board’ with at least 40 percent of both sexes (Lückerath-Rovers, 2010) Although Spain has not applied penalty like Norway, Spain aims to comply the target in 2015 (Pande and Ford, 2011) Along with Botswana, the Netherlands had very low proportion of female directors on its boards before 2008 Only 34 over 113 Dutch listed

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companies had female directors, equal to 5 percent of all executive and non-executive directors (Lückerath-Rovers, 2009) Therefore, in 2008, a majority of Dutch parliament voted to update the Corporate Governance Code including a target rate of between 25 to 30 percent of women on executive and supervisory board by 2015 (Lückerath-Rovers, 2010) Two years later, France applied the legislative gender quota for corporate boardroom with a tight schedule to achieve 20 percent (2013) then 40 percent (2015) female (Pande and Ford, 2011) In spite of many disadvantages, appreciation of balanced gender leadership is believed as the solution to overcome culture of inequality in business environment

Increasingly, female talent on board level has become an international trend in Belgium, Canada, Italy, the United Kingdom, Australia, Middle East countries and also Asian developing countries (Terjensen et al., 2009; Villiers, 2010; Pande and Ford, 2011) However, Kang’s study (2007) shows a very low rate of 85 women over 820 total member directors in Australia’s top companies; even 33 companies have no female director Recently, Villiers (2010) notes statistical result of a slightly change from 5.8 percent to 12.2 percent of female-held directorship

in United Kingdom within a decade The paper, especially, supposes tokenistic recruitment of women director continues increasing during that period, from 58 percent in 2000 to 75 percent in

20094 Unexpectedly, some Norwegian public firms even convert to private or register in the United Kingdom instead of applying legislated gender quota The imbalance of women’s presence in the “conservative board” insists more evaluation on corporate governance practices

to have equality rights for women in a modern corporate board

2.2 Tax avoidance and corporate governance

2.2.1 Tax avoidance

Corporate income tax is the important expense in profitable firms, thus, always being considered to reduce Together with other taxes, it is also the main revenue to government, so a lot of policies are issued to prevent reducing taxes However, it is ambiguous to identify whether tax reducing is treated as permissible or illegal transaction (Hanlon and Heitzman, 2010) Under different perspectives and examination, the term “tax avoidance” has no universally accepted

4 Tokenism = actions that are the result of pretending to give advantage to those groups in society who are often treated unfairly, in order to give the appearance of fairness

Besides having relatively young literature and missing a conceptual definition for tax avoidance, estimating tax position from financial statement information is another limitation for researchers and investors (Liswosky, 2008; Hanlon and Heitzman, 2010) Especially, evaluating tax planning continuum from the visible elements of financial statement may lead to some errors (Hanlon and Heitzman, 2010) Virtually, many researchers only can infer estimated taxable income or tax liabilities from reported current tax expense scaled by statutory tax rate (Frank, 2009; Wang 2010, Hanlon and Heitzman, 2010; Lennox et al., 2012) Moreover, firms in different economic or bussiness model have differences between Generally Accepted Accounting Principle (GAAP) expenses and revenue versus the recognition required by tax law (Blaylock et al., 2010) Conventionally, capturing general tax avoidance from public data source of financial statement is only suitable for non-conforming tax position which lowers taxable income relative

to GAAP income in any way (Hanlon and Heitzman, 2010)

2.2.2 Tax avoidance and corporate governance

Tax avoidance as an important topic of tax research has increasingly been concerned in new empirical researches approaching determinants and consequence of it Tax accounting literature continues investigating the variation in tax avoidance and motivation for different tax planning level, such as incentivizing policy (Phillips, 2003; Armstrong et al., 2012) Beyond traditional corporate governance dimension like incentives compensation, ownnership structure, considerable researches are interested in potential engagement like tax avoidance related to board

of director composition, trade union or social responsibility (Lietz, 2013)

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Recently, besides increasing topics of tax avoidance determinants and consequences, the role of directors or executives to tax reporting is developed in finance and economic tax studies Dyreng, et al (2010) has found a significant association between top executives and tax avoidance measure cash effective tax rate Further, Rego and Wilson (2012) imply the positive relation between tax aggressiveness and equity risk incentives for managers’ compensation Moreover, Lanix and Richardson (2011) document the regression result of higher presence of independent board directors with less tax avoidance Broadly, interaction of tax avoidance and corporate governance is an emerging subject

On that agency prediction base, many studies attempt to provide incremental explanation for the cross-sectional variation in tax avoidance Investigations frequently focus on the role of corporate governance features such as compensation practices, executive incentives or ownership patterns McGuire et al (2011) investigate dual class stock ownership causing the agency conflict that relate to corporate tax avoidance In addition, Hanlon et al (2007) and Armstrong et

al (2015) are interesting in the link between corporate governance, managerial incentive and tax avoidance Hanlon et al (2007) include “Gompers-Index” as a governance-index to analyze the role of corporate governance on tax noncompliance The authors interpret governance quality is not a significant factor determine corporate tax noncompliance They also indicate tax deficiencies of foreign-controlled groups are smaller than purely domestic groups’

More and more researches cover corporate dimension associated with tax avoidance Motivated from agency theory of corporate board roles, Minnick and Noga (2010) consider four dimensions of corporate governance including board composition to investigate the corporate role in long-run tax management It is noteworthy that board size and the number of independent directors on the board are positively related to effective tax rates The result is consistent with finding of Lanis and Richardson (2011) examination the effect of board composition on tax aggressiveness in Australia The authors find that a higher proportion of none-employee directors can reduce the probability of tax aggressive behavior Evidently, diversity in boardroom relates

to tax avoidance activities

2.3 Gender diversity in boardroom and tax avoidance

Gender element in board composition is rarely documented in any prior studies examining relationship of governance and tax avoidance Law and Mills (2015) have paid

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attention to gender but only examine possibility of tax aggressiveness and male CEO, even this variable has insignificant coefficient Before them, Dyreng et al (2010) also document no gender difference, at executive level, in tax avoidance Then Francis et al (2014) figure female CFOs and their male counterparts engage similarly in tax avoidance Especially, the authors emphasize that the female CFOs pursue not all tax saving opportunities to avoid extra risks Moreover, although the reason behind gender effect on tax aggressiveness is risk-aversion of female (Francis et al., 2014), female fund managers do not differ significantly with male in performance and investment behavior (Atkinson et al., 2003) or being the professional analysts with bolder and more accurate forecasts (Kumar, 2010) While previous studies figure the impact of gender diversity in corporate boardroom, therefore, it is necessary to have an overall evaluation the presence women on the corporate board and tax avoidance

2.3.1 Women’ participation in boardroom and tax avoidance

Assuming, all firms may involve in minimizing corporate tax expense if there are few costs associated with tax avoidance However, there are different tax positions between firms even in same industry or across industries There has been firms pay more tax than the others while there are firms avoid more tax at same or lower tax rate Hence, the question is why there are differences behavior in tax avoidance opportunities, called the “under-sheltering puzzle” (Desai and Dharmapala 2006; Hanlon and Heitzman 2010)

Possibly the hypothesis suggests that avoiding taxes may carry some non-trivial costs They may include both tax and non-tax cost like implementation cost, potential imposed penalties, lobby for taxing authorities, and reputation damage to firms and their managers (Rego and Wilson 2012) For more serious tax avoidance, the uncertainty involved can be extremely high The most direct risk to firms which involve in tax avoidance, broadly or seriously, is challenges from tax authorities Especially, publicly traded firms, have to face with auditors and the securities regulators Because reducing tax positions are normally not supported by actual facts, they are more likely to be challenged, and it may be subject to large penalties (Lisowsky, 2009) Wilson (2009) estimates that the penalty can be as high as 40% of the original tax savings from the tax shelter transactions in a sample of tax shelter firms in United States Moreover, reputation cost is another non-tax cost for tax avoidance firms The popular press often casts a negative light on firms with aggressive tax positions For instance, Coca-Cola and Metro Cash

H1: participation of female directors in boardroom likely reduces tax avoidance

2.3.2 Chairwomen and tax avoidance

Under view of the investors, tax avoidance is such a transaction diverse resources from the state to shareholders and relates to incentive compensation plans Phillips (2003) finds that more effective tax planning results from compensating buisness-unit managers on an after tax basis, but not for CEOs Hanlon et al (2007) presents another evidence of incentive schemes compensating executive which are associated with more tax nonconpliance The study recognizes same conclusion that executives are rewarded for reducing tax obligation

To the publicly traded firms, corporate board of directors is responsive to the stakeholders’ rights and wishes, normally related to investors’ Besides the descriptive benchmarking or questionnaire survey studies examine the influence of women presentation on board, various studies execute quantitative analysis evaluating the impact of having female directors on financial or social performance Erhard et al (2003) shows that the share of female and minorities board members is positively correlated with firm financial performance, measured

as return on asset (ROA) and return on investment (ROI) based on 127 large US companies data Another study from Carter et al (2003) has found positive relationship between the presence of women on board in companies of Fortune 1000 and firm size, board size and Tobin’s Q, measurement of firm value In addition, a recent study in the Netherlands suggests that the

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presence of women on board is an attribute of companies having better performance with higher return on equity (ROE) (Lückerath-Rovers, 2013) In other words, a part of chairwomen roles is linked to good corporate governance conditions and controlling to mitigate unexpected cost from managerial opportunism which may lead to tax avoidance

Essentially, the quality of decision-making and it impact on firm performance is not easy

to measure because many factors affect them or may distort the result Ryan and Haslam (2005) first time introduces the term “glass cliff” when investigating the poor performance of companies which appointing female directors in 5 months during the economic decline They argue that it is

no discernible effect from female presence in short-term and precarious situations but would be likely advocated male director if there is a change in shareholder value after that period As Rose (2007) reports no significant link between Tobin’s Q and gender diversity on Danish boards, the research suggests female should have high position in society to be an influenced decision maker Therefore, chairwomen as the corporate principle advocate for more transparent corporate governance than reducing tax liabilities to increase shareholders benefits

H2: chairwomen in HOSE listed firms and tax avoidance activities have negative relationship

2.3.3 Female executive in boardroom and tax avoidance

The agency perspectives of tax avoidance, also called corporate governance view of taxation, introduced by Desai et al (2007) emphasizes that tax avoidance facilitates managerial opportunism Because of benefit conflicts, tax avoidance might be used as a strategy to cover up the opportunistic extraction of rents for the self-interested managers (Desai et al 2007) In the contrary, Rego and Wilson (2012) show a positive relation between tax avoidance and top executives’ equity risk incentive The after-tax incentives raises CEOs’ tax aggressiveness efforts, eventually increases their after-tax earnings, but not corporate after-tax value Hence mitigation agency costs become a matter of governance possibly by monitoring managers and installing appropriate incentives

Although presence of executive directors in the boardrooms is not supported by classic governance theory and agency theory, the executive officers are the ones directly involving and implementing various tax-planning opportunities such as restructuring an organization or locating corporate operations in low-tax jurisdiction, even illegal activities Besides, female

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executives exhibit less confidence in significant decision-making than male executive, such as acquisitions and issuing debt (Huang and Kisgen, 2013) It may come to a question if there is the relationship between the risk-averse women and the agency problem to over-invest in tax avoidance that affect shareholder’s benefit Possibly, female directors hold managerial role are not likely involving in the risky tax avoidance activities

H3: executive female directorship is negative associated with tax avoidance

2.3.4 Summary

Many researchers recommend considering corporate governance as more important in the modern business Gender diversity connecting to good corporate governance and tax avoidance are the emerging topics of corporate governance, recently However, Rose (2007) has suggested that female need to have high position in society to have powerful decisions in organizations Therefore, examining the impact of women board directors and tax avoidance should include the important positions which held by those female directors Research problem is summarized in the below table:

Table 2.1: Summary hypotheses and research questions

1 Is presence of women in

boardroom associated

with tax avoidance?

H1: participation of female directors in boardroom likely reduces tax avoidance

H1.1: availability of female directors in boardroom likely reduces tax avoidance

H1.2: increasing number of female directors in boardroom likely reduces tax avoidance H1.3: increasing proportion of female directors in boardroom likely reduces tax avoidance

2 Is there any relationship

between chairwoman and

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CHAPTER THREE METHODOLOGY 3.1 Analytical framework

From theoretical and empirical review, the relationship of woman board director and tax avoidance can be decribed through the analytical framwork below The presence and position of woman board director are dependent variables Some selected firm’s attributes which may explain the performance of tax avoidance activities are included as control varialbes of regression models

Figure 3.1: Analytical framework

3.2 Data and data source

To examine relationship of female board directors and tax avoidance activities, data set is collected from annual report and financial statements of listed firms on Ho Chi Minh Stock Exchange (HOSE) from 2010 to 2015 Currently, there are 319 firms listing shares on HOSE According to Vietstock.vn industry classification, similar to Vietnam Standard Industrial

FIRM ATTRIBUTES

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Classification VSIC 2007, collected firms are allocated into eight groups after eliminating firms designated as financial and insurance and missing data firms Final sample consists of 1,776 firm-year observations of 296 public firms with eight groups (see Appendix A)

The primary source of data contains the firms’ financial data and board information which are obtained by manually collecting from website of http://vietstock.vn – the online portal for finance and securities and http://ra.vcsc.com.vn of Viet Capital Securities Although these websites have different industry classification, they share same firm accounting information While income statement provides income, profit and expense data, capital or asset structure are filtered from balance sheet All control variables and tax avoidance calculation are gathered from those data Gender information is extracted from the available annual report on Vietstock.vn

a set of three regressors

Table 3.1: Variable construction

Dependent variable Construction

Gaapetr Total tax expense/Pretax Income of year t (truncated [0, 1])

(Total tax expense = Current tax expense + Deferred Tax) Cashetr Cash tax paid/Pretax Income of year t (truncated [0, 1])

Btd (Pretax Income – Taxable Income)/ beginning total asset

(Taxable income = Current tax expense /statutory tax rate)

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Table 3.2: Explanatory variables

Variable Expected signs Construction

Independent variable

wob + - Equal 1 if firm has at least one female board director, and

zero otherwise nowob + - Number of female board directors

womanratio + - Number of female board director/total board members

chairwm + - Indicator that equals 1 if firm has female board director

appointed as chairwoman, and zero otherwise

wmexe + - Number of female board directors being executive

managers

Control variable

Llev + - Long term debt/ beginning total asset

Slev + - Short term debt/ beginning total asset

Fasset - + Fixed Asset/ beginning total asset

Cash - + Cash and cash equivalents/ beginning total asset

book-tax-is the ratio of tax expense over pretax income where tax expense can be total tax expense, current tax expense or cash taxes paid BTD is the difference between pretax income and taxable income Many previous empirical studies at firm-level propose to use ETR or BTD capturing broad tax avoidance Dyreng et al (2010) using two forms of ETRs, total tax expense and cash tax paid scaled by pretax income, to analyze effect of executives on tax avoidance Furthermore, Lisowsky et al (2013) examines both ETR and BTD to review legal and less uncertain end of the tax avoidance continuum Particularly, Lennox et al (2012) uses eight tax avoidance proxies, five ETRs and three BTDs, to examine the association between aggressive tax reporting and accounting fraud

Effective tax rate is computed by dividing any version of tax expense to accounting earning before tax These measures capture the average rate of tax per dollar of income possibly describing different inferences when numerator changed Basically, the numerator in the GAAP ETR is total income tax expense equal to sum of current tax expense and deferred tax expense presented in income statement The GAAP income tax expense includes several items that are not tax planning strategies, such as changes in the valuation allowance or changes in the tax contingency reserve but excludes a tax strategy like more accelerated depreciation (Hanlon and Heitzman, 2010) On the other hand, the Cash ETR is computed using cash taxes paid shown in cash flow report in the numerator, and is affected by tax deferral strategies but is not affected by changes in the tax accounting accruals (Hanlon and Heitzman, 2010) Moreover, the cash taxes paid includes different period taxes while the denominator includes only current period earnings Higher ETRs, both GAAP and CASH, represent less tax avoidance position

In general, book-tax difference measures are closely related to effective tax rate measures while BTD is subtraction of taxable income from pretax income and ETR is a ratio of tax expense to pretax income (Hanlon and Heitzman, 2010; Guenther, 2014) However, empirical

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studies, especially accounting researches, typically use total asset as a scalar of BTD rather than un-scaled measure Moreover, the lack of financial statement disclosure for outsiders’ examination leads to derive estimated taxable income from current tax expense divided to statutory tax rate The estimation may contain error of taxable income for missing the actual cash taxes paid or to be paid on the current year’s earnings Hence, higher value of BTD is larger gap of pre-tax income and taxable income which means higher level of tax avoidance

Obviously, each measure has limitation in computation and feature In particular, temporary and permanent differences in taxes are reflected differently by each measure CASH ETR is the ratio included actual cash tax paid so it is not affected by tax accounting accrual changes Thus, cash effective tax rate does not reflect financial statement impact, yet any reduction of cash tax paid in current period (Dyreng et al., 2008) Meanwhile, BTD may represent both tax avoidance and earnings management activities because it reflects any transaction, permanent or temporary, generating gap of financial statement income and taxable income (Mc Guire et al., 2010) Ideally, tax return can stimulate taxable income more accurately, but this is the confidential data (Hanlon and Heitzman, 2010) In addition, total tax expense may

be affected by financial accounting rules, so GAAP ETR is not only a proxy of tax avoidance but also a consequence of financial reporting tax avoidance activities Contrariwise, less tax avoidance is implied by higher value of both ETR but smaller value of BTD One other difference between these measures is that prior studies often truncate effective tax rate, both GAAP ETR and CASH ETR, to the range [0, 1]

Besides, some other alternative proxies are developed to measure tax avoidance like unrecognized tax benefit and dummy shelter or long-term measurement However, those proxies are used in the firm samples likelihood engage in tax avoidance reporting or being “caught”, but not overall tax avoidance behavior While many alternative proxies of tax avoidance measure are developed, it is not appropriate to apply them in all tax research questions As a result, the traditional proxies as ETR and BTD should be used to avoid any specific cases of tax avoidance like tax sheltering, tax evasion or tax fraud

3.3.2.2 Independent variable

Independent variable for board of director composition is the dummy variable of woman

on board room (wob) wob is a dummy variable coded as one if firm i have at least one female

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director in year t, and zero otherwise Although, tax planning may be promoted for shareholders

wealth or being consequence of agency cost effect, the paper expects women board directors prefer less tax avoidance Besides, gender quotas in boardroom have been introduced in some developed countries as explained above Some of them are applying a “balance” rate at thirty to forty percent of female directors (Villiars, 2010) Thoroughly, the ratio of woman presence on

boardroom (womanratio) calculated as number of women (nowob) over board size (bsize) is

imposed to test whether the proportion of woman on boardroom in listed firms reach the relative

rate to affect effective tax rate or book-tax difference Similar to wob, womanratio or nowob is

used to indicate the availablility of women on boardroom

Especially, the chair of board directors is expected to have strong impact on tax reporting

and tax planning strategy Thus, firms have woman-on-board who appointed as chair (chairwm)

may have higher ETR or lower BTD It is also possible to devide female member as executive

directorship (wmexe) and non-executive director (wmnonexe) for the firms have woman on

boardroom Female executive directors are members of corporate board being a part of the executive team whereas non-executive directors are the members involving in policy making and planning only, not daily management in the organization Many introduced studies examine gender effect at executive level, CEO and CFO, who directly and indirectly affect on tax report and tax planning strategy Thus, including the female executive in directorship as extra independent variables can understand deeply the impact of woman role in boardroom to tax avoidance activities

Briefly, female board director is suggested to have high position in society to be an

influenced decision maker (Rose, 2007), the paper suppose combining wob, nowob or womanratio as the availability of women variables with top position chairwm and executive position wmexe to create a component of independent variables observing impacts of female

directors on tax avoidance Expectedly, each variable in the component has positive (negative) coefficient when the proxy effective cash rate (book-tax different) are used to measure tax avoidance

3.3.2.3 Control variable

Two set control variables are included in the regression model presenting the firm’s tax planning opportunities and firm’s operation These variables explain the types of activities and

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engaged in tax avoidance Most of the control variables are scaled by total asset of the beginning

of the year t to partially mitigate potential reserve causality issues

Firm’s attributes related to growth and profitability which include firms’ value (mb it),

economic of scale (size it ), profitability (roa it ) and financial structure (slev it , llev it , cash it) Larger and high growth firms are supposed to have more investments increasing tax avoidance (Francis

et al., 2014) Firm size (size it ) is the natural logarithm of firm beginning total assets mb it is the ratio of market price to book price collected from vietstock.vn Moreover, return on asset and cash holding are predicted to have negative effect on taxable income (Dyreng et al., 2010), i.e

higher roa it in profitable firms implies that firms more likely avoiding tax High cash and cash equivalents may be a signal of low cash tax paid leading low CASH ETR Additionally, leverage

ratio of long term and short term debt (llev it and slev it) is measured as long term debt or short

term debts scaled by beginning assets in year t The leveraged firms create tax benefits from debt

financing which can help firm reduce tax planning

The second group describes elements could change the differences between the book and

tax reporting, which are sga1 it , fasset it , (Dyreng et al., 2010; Mc Guire et al., 2010; Francis et al.,

2014) Increasing deducted expenses and capital-intense lead to lower taxable income, or higher tax avoidance Selling, general and administrative expense (SG&A) is one of the large expenses

in firm which include mangers’ incentives HOSE listed firms’ balance sheets present fixed asset including tangible, intangible and depreciation which are considered to be negative with cash

effective tax rate or positively associated with BTD

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3.4.1.1 Fixed effect model FEM

Error term and predictor variables in FEM are assumed to be correlated In FEM, the slopes of independent variables are constant while the intercept can vary across sections, but fixed across time Moreover, fixed effects regression can control omitted variables which are different between cases but fixed over time However, FEM estimation is not able to control fixed over time variables like genders, law, religions, etc Overall, the FEM estimates the effect

of independent variables on dependent variable by the changes in of variable over the time

3.4.1.2 Random effect model REM

This method can estimate the effect of time-invariant variables and assuming the individual specific effect has constant variance However, the estimated results of REM can be biased if having omitted variables Error term of REM consists of elements controlling unchanging and changing omitted effects Besides, REM supposes that unchanging omitted effect is uncorrelated with independent variables have no relationship

However, fixed effects are always gives consistent results in panel data regression statistically, even though random effects possibly have more significant p-values Therefore, the paper will choose FEM even if Hausman test provide insignificant p-value

3.4.2 Robust standard Errors

Panels may have error structure assumed to be heteroskedastic and/or autocorrelated up

to some lag and possibly correlated between the groups Finally, some adjusted standard error method will be used to fix the panel data problems like Driscoll-Kraay standard errors

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CHAPTER FOUR EMPIRICAL RESULT 4.1 Descriptive statistic

4.1.1 Summary descriptive statistic

The descriptive statistics of all varialbes in basesline model (i) in the below table 4.1 in average, the means of two effective tax rates, namely gaapetr and cashetr, are 19.7 percent and

14.5 percent This average rate of GAAP effective tax rate is around 10 percent lower than average current corporate income tax 22 percent, applied from 2014 Meanwhile, the CASH effective tax rate refecting the actual cash tax paid of HOSE listed firms is just around 14.5 percent, which means 34 percent lower than statutory tax rate Moreover, Figure 4.1 shows that there are many firms have no cash tax paid reducing the mean of cash effective tax rate

Figure 4.1: Graph histogram of tax avoidance measures

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Table 4.1: Summary statistics of variables

Dependent variable

Independent variable

Number of female board directors nowob 1639 844 97 0 6

Number female executive in

boardroom

wmexe

1639 302 574 0 4 Number of female member/total

members in boardroom

womanratio

1639 146 164 0 8

Control variable

Net income/beginning asset roa 1710 093 372 -.31 14.71

Short term debt/beginning asset slev 1710 834 13.816 002 555.5 Long term debt/beginning asset llev 1710 175 1.175 0 47.392 Fixed asset/beginning asset fasset 1708 321 331 0 6.638

Cash and equivalent/beginning asset cash 1698 138 694 0 27.55

Besides, the mean value of book-tax difference (btd) is 0.028 stating the difference in

reported tax and finacial income, already scaled by beginning asset, in HOSE listed firms is consistent with prior studies data in other countries (Mc Guire et al., 2010) The differences are caused by both temporary and parmanent measurement differences (Plesko, 2004; Hanlon and Heitzman, 2010)

The woman’s presence in boardroom is also presented in the descriptive statistic table 4.1 and Figure 4.2 Public firms in Vietnam limit the board size from three to eleven members and common size is five to six memebers Mainly, HOSE listed firms have medium corporate board

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size of 5 members which correspond with mean of bsize at 5.73 Meanwhile, corporate boards of HOSE listed firms have few woman attending, i.e mean of nowob less than 1 Consequently the average ratio of female directors (womanratio) over total board members is just 14.6 percent

Figure 4.2: Graph histogram of corporate board size and women members

Table 4.1 also shows the average value of firm size (size) is 6.79 while mean value of mb

is 1.38 Arrcordingly , most of the firms publicly listed in HOSE have maket price equal to book

price The mean value of roa is 0.093; the average of leverage ratio short term debt slev is 0.834 and long term debt llev is 0.175 and mean value of cash is 0.138 fasset has mean value at 0.321 and the average sga1 is 0.094

Besides, the correltion of three measures of tax avoidance and other variables are presented in Appendix B There is relatively close related among independent variables with correlation value approximately from 0.32 to 0.63 Moreover, the control variables and dependent variable are in the accepted relation Additionally, Appendix C contents VIF values which almost are quite low at around 1.3 to 1.4 As a result, there is no impact of collinearity among the predictor variables in the regression models

4.1.2 Women board directors in HOSE listed firms

Number of firms publicly listed in HOSE having woman in boardroom has been increasing from 2010 to 2015, which is displayed in Figure 4.3 below In 2010, about 135 firms have 206 women appointed in board of directors This number has increased to 143 firms in

2011 and 150 firms in 2012 In average, from 2010 to 2015, there has been 5 percent increment

of number of firms and number of female board directors However, it is a slight decrease from

150 firms to 147 firms having female directors, and from 234 women to 228 women in 2013