Impact of Environmental Uncertainty on Tax Avoidance and Tax Evasion of Listed Companies in Tehran Stock Exchange

Although an organization’s environmental uncertainty may induce greater variability in reported earnings, managers have incentives to reduce this variability. The flexibility accorded by Generally Accepted Accounting Principles (GAAP) provides managers the means to accomplish this via exercising discretion in recognizing Earnings Management and tax avoidance. So, the aim of this study is to investigate the effect of Environmental Uncertainty on Tax Avoidance and Tax Evasion of listed Companies in Tehran Stock Exchange. The coefficient of variation (CV) of sales (scaled by total assets) to capture environmental uncertainty and these three measures of Tax Avoidance in our tests: Effective tax rate, the average effective tax rate 5 years and Tax Evasion of Differences between accounting Earnings and taxable Earnings. For this purpose three hypotheses are developed and data on the 142 companies in Tehran Stock Exchange for the period of 2012 to 2018 were analyzed. This regression model using combined data with a consolidated approach, reviews and tests. The results showed that the concentration Environmental Uncertainty has significant positive impact Tax Avoidance. Also the results showed that the concentration Environmental Uncertainty has significant positive impact Tax Evasion.