Board of Directors’ Characteristics and Corporate Tax Planning: Evidence from Manufacturing and Allied Firms Listed at the Nairobi Securities Exchange, Kenya

The study sought to examine the effect of board of directors' characteristics on corporate tax planning by Manufacturing and Allied Firms Listed at the Nairobi Securities Exchange, Kenya. Following the explanatory research design, data for the nine (9) manufacturing and allied firms listed at the Nairobi Securities Exchange, Kenya for the period 2010 to 2019 was analyzed based on descriptive and inferential analyses. The results obtained revealed that board independence had significant negative effect p=0.009, β=-0.0037 on the effective tax rate of the manufacturing and allied firms listed at the Nairobi Securities Exchange. On the other hand, both board size and board gender diversity had insignificant negative effect (p=0.783, β=-0.0197, and p=0.146, β=-3.9573 respectively) on the effective tax rate of the manufacturing and allied firms listed at the Nairobi Securities Exchange. Hence, the paper concludes that amongst different board of directors' characteristics, independence is most important in predicting the corporate tax planning. Specifically, a board of directors with greater independence would ensure better corporate tax planning of firms. The paper therefore recommends that the listed firms should always ensure the constitution of elaborate and balanced boards comprising of both executive and non-executive directors, as this brings about significant improvements in oversight functions of boards and consequently efficient tax planning.