Does the Interplay Between Audit Committee Independence and Audit Quality Mitigate Tax Avoidance? Evidence from Non-Financial Firms Listed on the Amman Stock Exchange

Through the synergy between an independent audit committee (AC) and the high-quality external audit, the opportunities for unethical management behavior, including tax avoidance, can be significantly reduced. Independent audit committees and fair audit fees jointly strengthen governance by ensuring oversight integrity, audit quality, and a reduced risk of unethical tax avoidance. Therefore, the study aimed to identify the impact of AC independence on tax avoidance practices in non-financial firms listed on the Amman Stock Exchange (ASE), considering the moderating role of the external AFs. The research used a sample consisting of 53 non-financial companies listed on the ASE from 2017 to 2023, yielding 371 firm-year observations. Regression analysis was applied to test the direct effect of AC independence on tax avoidance, as well as the interaction effect of AFs. The results show that the effect exerted by the independence of AC on tax avoidances is negative but statistically insignificant. However, when the interaction between AC independence and AFs is considered, the effect becomes statistically significant, indicating that appropriate audit fees enhance the effectiveness of AC independence in curbing tax avoidance. The study shows that audit committee independence is effective only when supported by fair audit fees, underscoring the need for balanced governance practices in emerging markets like Jordan.