The Relationship between Tax Avoidance and Earning Management with Firms Risk

Momeni Taheri, Mehdi; Ghyasi Gharveh, Somayyeh

doi:10.22034/necsbm.2025.542746.1144

The Relationship between Tax Avoidance and Earning Management with Firms Risk

Articles in Press

Document Type : Original Article

Authors

Mehdi Momeni Taheri ¹

Somayyeh Ghyasi Gharveh ²

¹ Assistant professor, Department of accounting, Central Tehran branch, Islamic Azad University, Tehran, Iran.

² Ph.D. candidate, Department of accounting, Central Tehran branch, Islamic Azad University, Tehran, Iran.

10.22034/necsbm.2025.542746.1144

Abstract

The tax avoidance and earning management are concepts that have been study more than with return while in less risk assessment has been of interest to researchers. Therefore, the aim of this study to investigate the relationship between tax avoidance and earning management with Iranian firm’s risk. In this study, to measure tax avoidance is use standard deviation of cash effective tax rate, the model Kasznik to estimated earning management and stock return volatility used as criteria of the risk. To test the hypothesis, using of a panel data and fixed effect, the Information 113 companies listed on Tehran Stock Exchange during the years 2015 to 2023 is analyzed. The results indicated that there was a significant negative relationship between tax avoidance and risk. These results consisted with value enhancing. The results also showed that there is a significant positive relationship between earning management and risk, which reflected the views opportunistic earnings management. These findings can are useful for financial analysts and investor, particularly individual investors is that the analysis and choice of investments, consider the activities of managers in risk assessment.

Keywords

Cash Effective Tax Rate

Earning Management

Risk

Tax Avoidance

Subjects