The Impact of The Board of Directors’ StructureonTax AvoidanceIn The Companies Listed in Tehran Stock Exchange

ABSTRACT:The aim of the present study is to examine the impact of board of directors’ structureon firm tax avoidance. For tax avoidance, the existence of an audit provision regarding tax status in an independent audit report was investigated which is called aggressive tax policies. For Board of Directors structure, the ratio of executive members of the Board of Directors (BD) and the ratio of their change and their independence were studied. The population of the survey was all the firmslistedon theStock Market of Tehranduring the period of 2010 to 2012(three years). Testing of principal hypotheses was performed by logistic regression method in order to evaluate the effect of a number of factors on the possibility of applying aggressive tax policies by companies. This model included 3 principal independent variables and 3 control variables. First, the research variables were examined one by one and from among the three principal independent variables, the independence of the BD had a significant relation with the aggressive tax policies. However, the ratio of non-executive members of the BD did not show a positive and significant relation with tax avoidance policies. Moreover, BD change cannot formulate the tax avoidance policies. Next, all three principal independent variables were incorporated in the model. The complete model included all principal predictors which were statistically significant, showing that this model has almost been able to identify the firms applying the aggressive policies. The model formulated the status of these policies before entering control variables of R2=.391. In general, 80.6% of cases were correctly classified. After entering the control variables of R2=.391, the variance of aggressive tax policies were explained. Next, based on forward method, and after entering the control variables, 82.1% of cases were correctly predictable. According to coefficient tables, before entering the control variables, two independent variables had a significant statistical relation with the model. In total, the principal independent variable explained the dual role of the Board of Directors – Chairman with a significant relation. The ratio of non-executive members and their changes showed a control variable of the financial lever and the aggressive tax policies with no significant relation.