Investigating the Effect of Effective Tax Rate and Quality of Corporate Governance on Tax Evasion and Tax Corruption

Document Type : Research Paper


1 Ph.D. Candidate, Department of Accounting, Kerman Branch, Islamic Azad University, Kerman, Iran.

2 Prof., Department of Accounting, Faculty of Management and Economics, Shahid Bahonar University of Kerman, Kerman, Iran.

3 Assistant Prof., Department of Accounting, Kerman Branch, Islamic Azad University, Kerman, Iran.


Objective: This study investigated the effect of effective tax rates and the quality of corporate governance on tax evasion and corruption by using financial variables.
Methods: Multiple regression model was used to examine research hypothesis .Data was selected by referring to the financial statements and explanatory notes of the companies listed on Tehran stock exchange, and a sample containing 1600 year - company entries for the period between 2003 to 2018 were selected. Data were analyzed by using Excel and Eviews software.
Results: There is a significant positive relationship between the effective tax rate and tax evasion and corruption of companies listed on the stock exchange, but by adding the quality of corporate governance variable to the above relationships, no significant effect on the relationships between the effective tax rate and tax evasion and corruption was found.
Conclusion: The findings of the research can be explained from two dimensions. The first dimension is the negative effect of corporate governance quality on tax evasion and corruption, and the second dimension is the lack of effect of corporate governance quality on the relationship between effective tax rate and tax evasion and corruption. Given the fact that corporate governance quality is not fully developed in Iran and its current mechanisms and structures have not yet been implemented in a standard and comprehensive manner, its effect will reduce. Also, the size of the company based on the theory of political power, sales growth according to theory of tax effect, and the rate of return on assets because of affecting the performance of companies, have a positive effect on tax evasion. Changes in tangible fixed assets due to the difference between accounting profit and profit based on calculating higher or lower taxes (depending on tax laws and accounting applicable to property, machinery and equipment) also have a positive effect on tax evasion, while tangible fixed assets have a negative effect on tax evasion. Besides, fluctuations in sales and rate of return on assets positively affected tax corruption, while sales growth, the ratio of market value to stock book, and the age of the company, based on life cycle theory, negatively affect tax corruption.


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