Board diversity and voluntary tax disclosures: Do institutional characteristics matter?

Manuscript Type: Empirical.
Research Question/Issue: Building on the argument that diverse boards could be more receptive to stakeholder concerns, this
study examines whether board diversity (in both composition and structure) is related to increased information disclosure on a
firm's tax policy in response to stakeholder and societal concerns about aggressive tax policies.
Research Findings/Insights: Data from large European multinationals indicate a positive causal relationship between board-
level employee representation (BLER) and a firm's voluntary tax disclosures, as well as a positive relationship for the existence of
a corporate social responsibility (CSR) committee, especially with a unitary board structure. Board gender diversity (BGD) has
no significant effect.
Theoretical/Academic Implications: Job- related diversity (i.e., deep- level diversity) on a board increases the availability of
firm- specific information to the board and has more impact on firm outcomes than does non–job- related diversity (i.e., surface-
level diversity), which increases the availability of general information. Institutional characteristics (i.e., tax enforcement and tax
morale) act as either complements or substitutes, depending on the type of board diversity.
Practitioner/Policy Implications: Enhancing board diversity to increase a board's effectiveness, as promoted in many corpo
rate governance codes, should be applied with some nuance. Whereas adding employee representatives to a board reduces infor
mation asymmetry concerning a firm's tax policies, adding female directors to the board does not make a firm more responsive
to societal calls for tax transparency