The relationship between accounting and tax expertise of Chief Financial Officer, Executive Directors and tax planning of listed companies in the Stock Exchange of Thailand

Abstract

This research aims to study the relationship between accounting and tax expertise of -Chief Financial Officer, Executive Directors and tax planning. The study were approached by the expertise of Chief Financial Officer based on (1) Education and Certified of Public Accountant (CPA) and Tax Auditor (2) years of experience as chief Financial officer, The expertise of executive directors in accounting and tax was considered from the ratio of skilled executive directors in accounting and tax per all executive directors. The expertise of executive directors based on (1) graduated in accountancy or finance (2) Certified of Public Accountant or tax (3) were a Chief Financial  Officer. The best tax planning system, requires a person who was expertise in accounting and tax to leads the Company has an effective in financial management.

Data were collected from 237 companies listed by the Stock Exchange of Thailand in 2011. This research analyzed descriptive statistics with frequency, percentage, minimum and maximum value, means standard deviation and tested correlation with multiple regression analysis.

The results showed that the companies have average Effective Tax Rate of 23%. Chief Finance Officers from 225 companies (94.90%) out of total 237 companies did not graduate in accounting or finance, and were not the Certified of Public Accountant (CPA) or Tax Auditor. The chief finance officers from the rest 12 companies (5.10%) graduated in Accounting or Finance and were the Certified of Public Accountant (CPA) or Tax Auditor which is classified in service industry sector 5 companies. An average of duration of tenure in chief Financial officer is 7 years, average of ratio of skilled executive directors in account and tax per all executive directors is 23%.

The study found that, Effective Tax Rate of companies which employ the Chief Finance Officers graduated in accountancy or finance and were the Certified of Public Accountant (CPA) or Tax Auditor is 21% which is lower than an average of Effective Tax Rate of companies  which employ the Chief Finance Officers who did not graduate in accountancy or finance or were not the Certified of Public Accountant. Companies which Executive Directors have experience of working in Chief Financial officer less than 7 years have average Effective Tax Rate of 23% and average of Companies which have Executive Directors occupied in Chief Financial officer more than 7 years is 24%. The average Effective Tax Rate of Companies which have 25% and above of the ratio of skilled executive directors in accounting finance or tax is 23% lower than average Effective Tax Rate of companies which have ratio of Executive Directors less than 25%.

At confident level 95% accounting and tax expertise of Chief Financial Officer and Executive Directors have no correlation with tax planning. However, Food and Agro Industry sector and Recourses sector have correlation with tax planning.