The effect of auditor characteristics on tax avoidance of Iranian companies

Abstract

Purpose The purpose of this paper is to investigate the relationship between auditor characteristics and the level of tax avoidance in an emerging market. Design/methodology/approach In this regard, the effect of various factors such as auditor tenure, auditor industry specialization, audit reports and audit fees on tax avoidance was examined. The study sample includes listed companies in the Tehran Stock Exchange. The time period of study is six years from 2011 to 2016. Also in this study, firm size, leverage, firm age and auditor size were controlled. Findings The results of this research were determined in four hypotheses. First and second hypotheses that explore the relationship between auditor tenure and auditor industry specialization with tax avoidance were not confirmed. But the results showed a significant relationship between the type of audit opinions and audit fees with tax avoidance. Originality/value The current study investigates the auditor characteristics on tax avoidance in a developing nation of Iran and the results may helpful the developing countries.

The impact of ownership structure and the board of directors’ composition on tax avoidance strategies: empirical evidence from Jordan

“…Prior studies have also considered that the age of the firm represents one of the important factors that affects tax avoidance decisions (Amanda and Frida, 2018; Salehi et al , 2020). For instance, Scott (2006) argued that older firms that handle a broader business may face higher reputational risk, so such firms will tend to mitigate risk and choose actions that do not increase such risk; tax avoidance is one of the actions that the oldest firms bear in mind.…”

“…Thus, A = Dyreng et al (2010); B = Armstrong et al (2015); C = Minnick and Noga (2010); D = Core and Larcker (2002); E = Richardson et al . (2014); F = Dyreng et al (2017); G = Lanis and Richardson (2011); H = Richardson et al (2013); I = Gaaya et al (2017); J = Alhababsah (2019); K = Badertscher et al (2013); L = Barros and Sarmento (2020); M = Amanda and Frida (2018); N = Salehi et al (2020)…”

Association of Corporate Governance and Tax Compliance of Indonesia State-Owned Enterprises

“…H6: Audit Committee associated with SOE tax compliance External auditors are selected by the audit committee as a form of supervision to provide opinions on the fairness and transparency of state-owned financial information. Tax compliance behavior will improve the quality of transparency of financial statements (Balakrishnan et al, 2011;Pourheidari et al, 2014;Salehi et al,2020). Companies that use big-4 services as external auditors will be more likely to comply with taxes (Annisa, and Kurniasih, 2012;Gaaya et al, 2017;Richardson et al, 2013).…”

“…Audit quality can be measured by the size of external auditors selected and can be differentiated into big-4 consist of PricewaterhouseCooper (PwC), Deloitte Touche Tohmatsu Limited (Deloitte), Ernst&Young (EY), and KPMG also nonbig-4 (Salehi et al, 2020, andTandean, andWinnie, 2016). This variable is measured using a dummy variable, i.e.,1 if the company's external auditor is big-4 and 0 otherwise (Richardson et al, 2013).…”

Tax avoidance in the Indonesian manufacturing industry

“…According to Lee and Kao (2018), the specialty of industry auditors has an effect on tax avoidance because auditors can help companies avoid their taxes. According to Khairunisa et al (2017), Setiyawati and Rohman (2015), Amaliyah and Rachmawati (2019), auditor specialization has a negative effect and Salehi et al (2020) assess that auditor specialization has no effect on tax avoidance. An auditor will maintain his reputation and not cooperate with companies to evade tax.…”