Investigating the Relationship between the Industry Expertise of Auditor and Tax Avoidance of Companies Listed in Tehran Stock Exchange

The main purpose of this paper is Investigation the Relationship between the Industry Expertise of Auditor and the level of clients’ Tax Avoidance. Auditor industry expertise divided in the three categories: tax expertise, financial statement audit expertise, and the overall (combination of tax expertise and audit of financial statements). To calculate tax avoidance, this paper uses effective tax rate(ETR), cash effective tax rate(CASHETR) and book-tax difference(BTD). The research sample included 47 participants for the time period 2003 to 2008 (1382 to 1387). Research hypotheses tested using probit and least squares regression. The results show that there is significantly correlation between auditor industry expertise and corporate tax avoidance. In other words, the companies that their auditors are the industry expert, have lower effective tax rate, lower cash effective tax rates and higher book-tax difference than the companies that are their auditors are not the industry expert. This indicates the high corporate tax avoidance.