Relationship Between Ownership Structure and Financial Performance on Corporate Tax Policy Investigation: Evidences from Firms Listed on Tehran Stock Exchange

Document Type : Research Paper


Department of Accounting, Faculty of Management< University of Tehran, Tehran, Iran


Organizational factors affect organizational reporting and performance as well. Tax policy making has been a challenging issue for stock holders. Different types of ownership call for different reporting Policy. Therefore, firms with institutional owners along with firms in presence of governmental owners are in different position of tax planning. There are two types of tax policy over the literature, aggressive policy and conservative policy. In this research impact of ownership structure and firm performance on tax policy making is going to be studied.
The aim of the study is to examine the effects of ownership structure and firm performance on tax planning among Iranian public listed firms. Hence based on the literature, the hypotheses are developed as follows:
H1. Ownership structure affects tax policy in Iranian public listed firms.
H1 a. institutional ownership affects tax policy in Iranian public listed firms.
H1 b. Governmental ownership affects tax policy in Iranian public listed firms.
H2. Firm performance affects tax policy in Iranian public listed firms.
H2 a. Sale growth affects tax policy in Iranian public listed firms.
H2 b. Return on assets affects tax policy in Iranian public listed firms.
All the firms listed on Tehran Stock Exchange (TSE) over 2010 to 2014 are statistical population in this research. Sample was selected based on the following criteria:
-   Firm should be accepted on TSE before ending 2009.
-   Fiscal year ends on March 20 every year.
-   Research data of the firm is available.
-   Firm is not listed as financial institutes.
Based on the above criteria 137 firms i.e. 685 firm-year was selected. Data was gathered from financial statements or other types of firms’ disclosure. Research type is correlation and research data regression model is used for analysis.
Results show a meaningful relation between the presence of governmental and institutional owners and tax policy. This relation is positive for institutional owners while it is negative for those of governmental owners. In other word, governmental owners push the firm to have more aggressive tax policy. Thus, the more the governmental owners a firm has, the more aggressive tax policy it will make. Firm performance and financial leverage has no relation i.e. on tax policy making.
This research studied the relationship between ownership structure and firm performance with tax policy making among public listed firms on TSE. Results illustrates that firms with more institutional and governmental ownership try to reduce their taxes using an aggressive tax policy. This may ruin economic transparency and call the government to plan for better privatization program. Other findings illustrate better firm performance has no meaningful relation with firms’ tax policy making. Other findings indicate large firms make more aggressive tax policies.


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