Abstract:
One of the reasons that companies avoid paying their taxes is that they choose to
use debts for their funding. In other words, tax saving, an activity of companies to
avoid taxpaying, can be used to finance corporate projects. Furthermore, since
institutional owners are more inclined to supervise, they may shrink managerial
behaviors to avoid taxpaying. In this study, institutional owners’ supervisory role
about tax efficiency on corporate capital structure was investigated. For this purpose,
a sample of 98 companies from 2005 to 2014 was selected from companies
listed on Tehran Stock Exchange (TSE). Following the research conducted by
Kramer, multiple linear regression based on panel data and the econometric software
Eviews were used for testing the research hypotheses. The results show that
tax has a negative and significant impact and institutional ownership has a positive
and significant impact on capital structure. In addition, the institutional ownership
in corporate companies impacts and adjusts the relationship between tax
and capital structure.
Machine summary:
ARTICLE INFO Article history: Received 17 August 2016 Accepted 27 November 2016 Keywords: Capital Structure Institutional Ownership Tax ABSTRACT One of the reasons that companies avoid paying their taxes is that they choose to use debts for their funding.
In addition, the institutional own- ership in corporate companies impacts and adjusts the relationship between tax and capital structure.
In this study, in addition to measuring the impact of tax on capital structure, institutional ownership was also used as an effective variable in this relation.
Therefore, the main purpose of this paper was to investigate the impact of institutional ownership on the relationship between tax and capital structure in the companies listed on the TSE.
The results obtained from testing the data related to 48 stock companies during 13 years from 1995 to 2007, indicate the lack of a significant relationship between capital structure and tax of the companies listed on TSE.
H3: Institutional ownership has a significant impact on the relationship between tax and corporate capital structure.
The following regression model was used to test the hypotheses: (View the image of this page)where: DR: Capital structure, TAX: Tax, INSOWN: Percentage of institutional ownership, Size: Company size, ��: Liquidity, ������: Company growth, ���: Return on assets 5 Findings 5.
After running the tests, we reached to the conclusion that institutional ownership in stock companies affects and adjusts the relationship between tax and capital structure.