The Connection between Systematic Risk and Corporate Income Tax (A case study of the Tehran Stock Exchange)

Corporate income taxes are the major source of tax revenues. This tax affects the systematic risks that companies confront with. Based on the data about 283 companies over period 2004-2011، we use random effects panel data models to examine the relationship between companies'' income، profit before tax and the beginning retained earnings Results of this study indicate that there is no specific relationship between systematic risk and the amount of tax paid by the companies; Among all companies only 93 fail to show significant effects of systematic risk. Additionally، the sign of the coefficient for the systematic risk variable is not the same for all the companies. The findings also imply that there is a significant and positive relationship between the ratios of profit before tax to nominal capital and the beginning retained earnings with ratio of tax to nominal capital of the companies. Moreover، the magnitude of the coefficient on the ratio of profit before tax to nominal capital is larger than the beginning retained earnings to nominal capital.