Document Type

Article

Publication Date

2-2026

Abstract

Tax avoidance has attracted substantial interest from researchers, regulators, and policymakers worldwide due to its significant impact on society as a whole. However, the majority of existing research focuses on developed countries, and the results are inconsistent. Thus, this research investigates the effect of management compensation on tax avoidance as well as the moderating role of audit quality, measured by auditor specialization, in this relationship. The sample includes 352 observations from 44 Egyptian firms listed on the EGX100 for the period 2016 to 2023. Using fixed-effects multiple regression, the findings indicate a significant positive relationship between management compensation and tax avoidance. They also indicate that auditor specialization positively moderates the relationship between the two variables. This suggests that managers receiving higher total compensation are more willing to engage in tax avoidance, especially when aided by a specialized auditor who can use his expertise to facilitate complex, less detectable tax avoidance activities. This research offers clear guidance to many stakeholders, including Egyptian policymakers and the board of directors, on how to mitigate the risks associated with tax avoidance.

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