The Investigating of Relationship Tax Avoidance and Managerial Empire-Building, Considering Corporate Social Responsibility

Document Type : Research Paper

Authors

1 Assistant Professor of Accounting, Shahid Bahonar University of Kerman

2 Master of Accounting, Shahid Bahonar University of Kerman, Kerman, Iran.

3 Assistant Professor of Accounting, Shahid Bahonar University of Kerman, Kerman, Iran. a.rahimi@uk.ac.ir

10.22099/jaa.2024.48847.2391

Abstract

Tax avoidance legally creates economic resources. Agency theory states that due to the conflict of interests between the manager and the owner, these resources lead to the manager's opportunistic behavior, such as empire-building. Attending to all the stakeholders is a must in the stakeholder theory and the purpose of social responsibility is to align the interests of managers and shareholders. Thus, the research motives to empirically investigate the relationship between tax avoidance and managerial empire-building by considering corporate social responsibility. The statistical sample of this research is by systematic elimination method and includes 729 firm-year observations obtained from companies admitted to the Tehran Stock Exchange (TSE) from 2011 to 2019. Examining the research hypotheses using multivariable regression showed that tax avoidance significantly increases managerial empire-building activities. In addition, it found that corporate social responsibility weakens the relationship between tax avoidance and managerial empire-building. The above findings are by the theoretical foundations available in the research literature of this field.

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Journal of Accounting Advances
Volume 15, Issue 2
November 2023

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History

  • Receive Date: 21 November 2023
  • Revise Date: 12 March 2024
  • Accept Date: 12 March 2024

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