The Impact of Tax Avoidance on the Future Stock Price Crash Risk of the Listed Companies in Tehran Stock Exchange

Tax payment results in reducing profits and remained cash for other stakeholders including shareholders of a company. So, naturally companies and its shareholders have motives to take some measures to evade tax. Effective strategies for tax evasion involves use of a complex and ambiguous reporting system. Since, Tax evasion can create opportunities for managers to pursue activities that are designed to hide bad news and accumulate them within firm. When the accumulated negative information, release into the market leading to stock price crash. The main propose of the present study is to investigate the relationship between tax avoidance and the future stock price crash risk in Tehran stock exchange. To do this, two main hypotheses and three subsidiary ones were specified and tested, a sample was selected among the listed companies in TSE during 1380-1388(2001-2009). Also, to test the hypotheses, the method of logistic regression and the model of pooling data were applied. The results indicated that, there is a positive relationship between tax evasion and future stock price crash risk.