Assessing the Threshold Level of Ownership Structure and its Relationship with Tax Avoidance in Security Market: A Nonlinear Smooth Transition Regression Approach

The main purpose of this article is to determine the threshold level of ownership structure and the relationship between institutional owners' shares and tax avoidance. To meet this end, the data of 110 firms over the periods of 1390-1399 in the Tehran security market were selected. Moreover, this study sought to investigate the hypotheses and relationship between the mentioned variables. So the panel smooth transition regression (PSTR) model was used. The results indicate that at different levels of institutional shareholders 'share, the linear relationship between variables is not confirmed, and increasing shareholders' share as a transfer variable to 27.54, the participation in tax avoidance increases but after this level, it decreases. Overall, the results of evaluating the relationship between ownership structure and tax avoidance confirmed that in Tehran Stock Exchange, the inverse U relationship between variables is confirmed; this means that before the threshold level, the effect of the ownership structure in tax avoidance has been incremental and subsequently decreasing. Therefore, monitoring of company size and share of institutional shareholders was recommended to determine the appropriate level of ownership structure, prevent the dominance of governmental managers and shareholders and reduce the conflict of interests of managers and shareholders.