The Moderating Effect of Female Directors on the Relationship Between Ownership Structure and Tax Avoidance Practices

The primary objective of this study is to investigate the intricate relationship between different ownership structures, such as family, institutional, managerial, and foreign ownership, and tax avoidance practices. It also seeks to explore the moderating influence of female board members in shaping these relationships. This study utilizes balanced panel data from 72 industrial and service firms listed on the Amman Stock Exchange during the period of 2018 to 2023. The Generalized Method of Moments (GMM) was employed to estimate the results. The results indicate that family and foreign ownership positively influence tax avoidance practices, suggesting that families may engage in tax avoidance to benefit from rent extraction, while foreign investors may pressure managers to manipulate tax liabilities or shift profits across countries to minimize taxes. In contrast, the presence of female directors as well as institutional and managerial ownership is associated with a reduction in tax avoidance. Female directors play a moderating role in the relationship between ownership structure and tax avoidance. Their presence in interaction with institutional ownership reduces tax avoidance by focusing on tax compliance strategies. However, this effect changes in family and foreign-owned firms, where control over decision-making lies with the families or foreign shareholders, limiting the impact of female directors in promoting compliance and aligning their role with the tax avoidance strategies preferred by the controlling owners.