Abstract:
The Iranian economy in recent years is due to the development of economic sanctions, a sharp decline in the price of oil and the deficit resulting from revenue - dependent on oil revenues and the trend towards tax revenues. While comparing the volume of the Iranian economy with the amount of tax income indicates the existence of a relatively significant tax gap. The tax gap is the difference between the collected taxes and the tax required by the law. The purpose of this study is to answer the question whether corporate governance is effective and strong on the relation between tax gap and future earnings changes? The statistical population of the research in Tehran Stock Exchange (TSE) firms and statistical sample consists of 120 companies in the period of 2007-2017. In order to test the hypotheses, multivariate regression using mixed data - data approach has been used. The results indicate that there is a significant inverse relationship between the tax gap and future earnings changes. It can be argued that increasing the difference between earnings accounting earnings can be associated with decreasing interest in the next year and less stability. On the other hand, significant positive relation between corporate governance is efficient and strong with future earnings changes. because corporate governance will ultimately lead to more sustainable future gains due to the decline of discretionary accruals in discretionary accruals. It is also reinforced by the effect of the tax gap on future earnings changes in firms that have efficient corporate governance, and this effect is only seen for a year later. And is not effective for the second and third years.
Machine summary:
The Impact of Effective Corporate Governance on the Relationship between Tax Gap and Future Profit Changes in Iranian Economy Rasoul Karamia,*, seyed Ali Vaeza,b, Ghasem Rekabdara,c aDepartment of Accounting, Ahvaz Branch, Islamic Azad University, Ahvaz, Iran bDepartment of Accounting, Faculty of Economic, Shahid Chamran University, Ahvaz, Iran cDepartment of Mathematics and Statistics, Faculty of Humanities ,Abadan Branch, Islamic Azad University, Abadan, Iran Abstract The Iranian economy in recent years is due to the development of economic sanctions, a sharp decline in the price of oil and the deficit resulting from revenue - dependent on oil revenues and the trend towards tax revenues.
The purpose of this study is to answer the question whether corporate governance is effective and strong on the relation between tax gap and future earnings changes?
The empirical evidence from the present study suggests that tax differences have a significant inverse relationship with changes in future earnings of firms, it can be claimed that increasing the gap between accounting and taxable profits could be associated with a decline in profits in the coming year.
According to the results presented in Table 9, the level of probability error associated with the fourth null that efficient corporate governance has a significant effect on the relationship between the tax gap and future earnings changes for the first, second, and third years, respectively, is 000005, 006743 and 006410, respectively, Which is less than 0005 for first-year profitability changes and greater than 005 for other years, Therefore, the null hypothesis is rejected.