The Relationship between Cash Tax Savings and Reputation Risk in the Stock Exchange of Selected Countries in the Persian Gulf Region

Document Type : Research Paper

Authors

Department of Accounting, Faculty of Management and Economics, Shahid Bahonar University of Kerman, Kerman, Iran.

10.22051/jaasci.2024.45839.1817

Abstract

Purpose: This paper examines that the reputational costs of engaging in tax avoidance activities have been considered by companies and their Chief Executive Officers when making decisions.
Method: We have collected data a sample of 119 companies that were selected from among the companies admitted to the stock exchange of selected countries located in the Persian Gulf, including Iran, Qatar, Oman, Kuwait and Saudi Arabia. The sample period is seven years from 2015 to 2021. To measure the reputation risk (independent variable) of these companies from the ranking of companies by the Industrial Management Organization in Iran and the ranking of companies in Arab countries was used by the prestigious magazine Forbes. The cash tax savings (dependent variable) was measured through the effective cash tax rate and the effect of reputation risk on it was investigated through a regression model.
Results: The hypothesis showed that a significant relationship between cash tax savings and reputation risk (cost).
Conclusion: It is concluded that some companies, when using strategies’ tax avoidance, pay attention to the costs caused by damage to the company's reputation and avoid it or become less involved in tax avoidance.
Contribution: A few researches have been done in the field of risk and costs of reputation related to issues such as taxes. This study can lead to the expansion and enrichment of this topic and the development of research literature in this sector. In addition, it should attract the attention of researchers and managers in tax section.

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References

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History

  • Receive Date: 11 December 2023
  • Revise Date: 12 September 2024
  • Accept Date: 01 July 2024

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