CORPORATE GOVERNANCE MECHANISMS AND CORPORATE TAX STRATEGY DISCLOSURE: A CONCEPTUAL FRAMEWORK FROM AN EMERGING ECONOMY PERSPECTIVE

Abstract

A rise in the use of tax transparency as part of the environmental, social and governance (ESG) agenda has elevated corporate taxation as one of the most important dimensions of corporate accountability. However, despite increasing regulatory attention towards corporate tax strategy, corporate tax strategy disclosure (CTSD) remains relatively uneven and largely voluntary in developing countries. This paper develops a conceptual framework to examine how corporate governance mechanisms influence the extent of CTSD among Malaysian listed companies. Grounded in Agency Theory, the proposed framework argues that four key corporate governance mechanisms namely board independence, board gender diversity, knowledgeable audit committee, and internal audit function that play important roles in reducing information asymmetry, strengthening monitoring, and enhancing corporate transparency. Unlike prior studies that primarily focus on tax avoidance outcomes, this study examines how companies voluntarily disclose their corporate tax strategies as a means of promoting transparency and accountability. The proposed conceptual framework extends the existing literature by explaining the relationship between corporate governance mechanisms and CTSD, thereby contributing to a better understanding of tax transparency from a corporate governance perspective. This study shifts the emphasis from measuring tax avoidance outcomes to examining the strategic disclosure of corporate tax information, highlighting CTSD as an important dimension of responsible corporate reporting. Finally, the paper identifies potential directions for future research, including empirical validation of the proposed relationships and the examination of institutional factors that may influence corporate tax disclosure practices.