Over the years, the growing culture of tax avoidance among multinational companies around the
world has shed light on the importance of improving corporate governance mechanisms. In the
Philippines, poor tax collection due to tax leakages has contributed to chronic fiscal deficits in
the country. The literature argues that good corporate governance mechanisms (e.g., the structure
of the board of directors) play a significant role in ensuring that the management acts in the best
interest of the firm and shareholders, thus eventually helping to mitigate the incidences of
corporate tax avoidance. Specifically, agency theory argues that the presence of more
independent- and female-dominated boards lead to lesser corporate tax avoidance because such
directors are stricter in monitoring management. On the other hand, the resource dependency
theory posits that firms with boards having more independent, older, and business-educated
directors are more likely to engage in tax avoidance because such directors have the experience,
expertise, and knowhow to engage in tax avoidance strategies. This paper examines the impact of
various board characteristics on the incidence of tax avoidance across nonfinancial and publiclytraded Philippine firms during the period 2003 to 2015. We use the residual book-tax gap, the
cash-effective tax rate, and the long run effective tax rate to measure corporate tax avoidance,
whereas board characteristics include board size, board age, board independence, CEO-Chair
duality, gender diversity, and the educational background of directors. We employ the two-step
Blundell-Bond System Generalized Method of Moments (GMM) estimation technique to address
endogeneity issues that may confound the relationship between board composition and structure
and the level of tax avoidance within the firm. Overall, we find no significant relationship
between board characteristics and tax avoidance, as measured by the long-run cash effective tax
rates. However, consistent with the agency and resource dependency theories, we find that board
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age is positively related with corporate tax avoidance, as measured by the residual book-tax gap,
whereas board independence and the proportion of board members with post-graduate degrees in
Business and Economics have a negative and positive relationship, respectively, when corporate
tax avoidance is proxied by the cash effective tax rate. These findings suggest that the case for
increasing the number of independent directors and reducing the number of older directors in
boards of Philippine publicly listed firms may help reduce incidences of corporate tax avoidance.
