The effect of tax avoidance and corporate governance on the bankruptcy risk of companies in the Tehran Stock Exchange

The purpose of this research is to investigate the effect of tax avoidance and corporate governance on the bankruptcy risk of companies in Tehran Stock Exchange. The information obtained in relation to the research variables was entered into an Excel spreadsheet and then analyzed using Eviuse 11 software. The statistical population of this research is based on the method of systematic elimination from among 159 companies admitted to the Tehran Stock Exchange during the period from 2015 to 2019. The results of the first hypothesis showed that paying taxes has an inverse and significant effect on bankruptcy risk. The second hypothesis showed that institutional ownership, managerial ownership and independence of the board of directors have an inverse and significant effect on the risk of bankruptcy, and the size of the board of directors and the size of the audit committee have no effect on the risk of bankruptcy. Despite the apparent benefits of increased liquidity from tax avoidance, our findings suggest that, overall, the costs of tax avoidance (rooted in increased agency costs, litigation, and default risk) far outweigh these benefits. The measures to avoid paying taxes are related to obtaining management rent, the lack of transparency of shares and the significant risk of legal prosecution and punishment (Foroghi et al.). All these factors can mediate the relationship between tax avoidance and bankruptcy risk. institutional owners with sufficient financial resources and expert managers to the capital market; They can manage the company well and effectively monitor the behavior of company managers. Therefore, institutional ownership improves the performance of the company and reduces the risk of bankruptcy.