The Impact of Corporate Governance on Tax Avoidance: The Mediating Role of Earnings Management in Emerging Markets

This study investigates the relationship between corporate governance and tax avoidance, with a particular focus on the mediating role of earnings management. Using a sample of ۵۰ firms and ۱۰۰ firm-year observations over a two-year period, the study employs panel data regression analysis to examine both direct and indirect effects. The results indicate that strong corporate governance mechanisms significantly reduce both earnings management and tax avoidance activities. Furthermore, earnings management partially mediates the relationship between corporate governance and tax avoidance, suggesting that governance structures influence tax behavior not only directly but also indirectly through financial reporting practices. The findings contribute to the literature by providing evidence from an emerging market context, where institutional oversight and regulatory enforcement are relatively weaker compared to developed economies. The study offers implications for regulators, investors, and policymakers regarding improving financial transparency and tax compliance.