The Relationship between Human Resource Investment Inefficiency and Tax Avoidance: Evidence from Tehran Stock Exchange

Document Type : Original Article

Authors

Mahmoud Mousavi Shiri ¹

Faezeh Rafiee ²

Ehsan Ghadrdan ³

¹ Department of Management ,Economics and accounting , Payame Noor University, Tehran, Iran

² Department of Accounting, Islamic Azad University, Mashhad, Iran

³ Department of Accounting, Technical and Vocational University(TVU), Tehran, Iran

10.22067/ijaaf.2021.40738

Abstract

Human resource is one of the most critical resources of any organisation that can play an influential role in different functional departments of companies. One of these practices is tax avoidance, which may occur due to the company's poor economic condition. In this study, we intend to investigate the relationship between the inefficiency of investment in human resources and tax avoidance in companies in Iran as a developing country. The research method used among the companies listed on the Tehran Stock Exchange is quasi-experimental with a post-event design. A sample consisting of 108 companies from 2013-2020 was examined using multivariate regression and panel data. The results of examining and analysing the hypotheses showed that over-investment and under-investment in human resource has a positive and significant effect on corporate tax avoidance. It seems that over-investment in human resources leads to an increase in administrative and sales costs (agency costs), and under-investment in human resources leads to a decrease in productivity. Companies tend to pursue policies to survive in competition with other companies, and corporate executives pursue tax avoidance as a helpful solution in this regard.

Keywords

Over-investment in Human Resource

Under-investment in Human Resource

Tax Avoidance

Corporate Executives

Subjects

• Accounting

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