Value relevance of financial information and corporate tax planning among public listed companies in Malaysia: the mediating role of audit quality

In the business world, taxes are key factors shaping investment, strategy, and financial planning. Corporate tax planning arranges a company’s affairs to minimise taxes and maximise returns through strategic and long-term decisions. This study examines corporate tax planning among Malaysian public listed companies, focusing on its relationship with earnings management, accounting conservatism and financial manipulation. The research also investigate the extent of corporate tax planning across different industries among public listed companies in Malaysia. Furthermore, the study explores the impact of the value relevance of financial information on corporate tax planning, with a particular emphasis on the mediating role of audit quality. Using a sample of 1,944 firm-year observations from companies listed on Bursa Malaysia between 2016 and 2021, the study employs secondary data and multiple linear regression analysis (E-Views 12) to assess the relationships between key financial determinants and corporate tax planning. A fixed effect model reveals significant relationships between earnings management, accounting conservatism, and financial manipulation with corporate tax planning. Moreover, the findings suggest that audit quality fully mediates the link between earnings management and tax planning. Partial mediation of audit quality is also found in the relationship between accounting conservatism and financial manipulation with corporate tax planning. These findings are valuable for financial analysts and regulators, as they provide insights into how financial reporting practices and audit quality influence corporate tax planning in Malaysia. This study contributes to the growing body of literature on corporate tax planning and highlights the importance of audit quality in ensuring transparency and compliance in tax-related decisions.