The Impact of Avoiding Tax on Accounting and Economic Firm Performance Criteria: Evidence from Tehran Stock Exchange

Tax avoidance is one of the most important decisions managers, which can have a positive or adverse effect on a company's performance by preventing the transfer of the firm's resources to the government. The purpose of this study is to investigate the effect of tax avoidance on accounting and economic performance criteria of listed companies in Tehran Stock Exchange with a sample size of 180 companies for the years 2009-2018. To test the hypotheses, multivariate linear regression got used, and to measure the performance of the firm, one accounting criterion free cash flow, and two economic criteria of economic value-added and market value-added have been used. The effective operating cash flow tax rates have also been used to measure avoiding tax. The research findings showed that there is an impact negative and significant tax avoidance on accounting and economic performance criteria of the firm, which means that with increasing tax avoidance, the company's performance has decreased. Therefore, it can be concluded that the choice of tax avoidance strategy as a way to prevent the outflow of resources harms the company's performance, which can be due to undesirable use of the resulting resources.