A Study of the Relationship of Firm Characteristics and Corporate Governance with the Difference between Declared and Final Taxes in Iran

Abstract

In the most cases, there is a difference between the tax declared by companies and the tax determined by tax authorities. The current study, aims the relationship of differences in declared and final taxes with some firm characteristics and corporate governance criteria in companies listed on the Tehran Stock Exchange including 102 listed companies (510 observations). The research hypotheses tested using the multiple linear regression (MLR) along with the generalized panel method of integrated data. The findings of the study indicate that there is a positive and significant relationship between interest expense coverage ratio, earnings before tax (EBT) to revenue ratio, and earnings before tax (EBT) to total assets ratio and differences in declared and final taxes; as a result, the higher the ratios are, the greater the tax wedge will be. Also, according to the results, no significant relationship is observed between differences in declared and final taxes and other variables including firm size and debt ratio, the ownership percentage of the big owner, presence of the state shareholder with minimum influence, independence of the board, and existence of the tax paragraph in financial audit report.

DOI: 10.5901/mjss.2015.v6n4p488