Investigating the Impact of Tax Avoidance Policies on the Type of Auditor's Report in Firms Listed in Tehran Stock Exchange

The main objective of this study is to investigate the impact of tax avoidance policies on the type of auditor''s report. Tax avoidance Policies refer to the policies and procedures that are applied to reduce the corporation tax. The criteria used to measure taxes avoidance are the one minus effective tax rate and the difference between accounting profit and taxable profit. The sample of 75 companies listed on the Tehran Stock Exchange is investigated for the period of 2002 to 2011 and logit-regression method is used to test the research hypotheses. The results show the positive relationship between tax avoidance criteria and auditor''s non-acceptable opinion. In other words، increase in tax avoidance criteria has a positive impact on the auditor''s non-acceptable opinion. The results indicate an effective external monitoring reduces the impact of tax avoidance on the auditor''s non-acceptable report. That is، an effective external monitoring lessens diversion opportunities and interests of managers and reduces the negative effects of tax avoidance on auditor''s non-acceptable opinion. The opportunities that emerge for managers due to non- transparent financial reporting when applying tax avoidance policies.