Abstract

According to the theory of political interests, companies and managers affiliated with government or political institutions may tend to avoid or reduce taxes. Companies strongly desire to establish close relationships with the government and politicians because these relationships bring many benefits. Self-interest and political motivations are strongly related to companies' decisions, especially in the behaviors related to tax avoidance. Based on this, this research aims to investigate the effect of political connections on tax avoidance, emphasizing the moderating role of accounting information quality. To achieve this goal and test the research hypotheses, 160 Tehran Stock Exchange accepted company’s data was collected from 2015 to 2022 and examined and tested with the multiple regression approach. The research results show a direct and significant relationship between political connections and tax avoidance. So, with the increase in political connections, the amount of tax avoidance also increases. Also, the results indicate that the quality of accounting information significantly moderates the relationship between political connections and tax avoidance. The test of the robustness of the results using the generalized moments approach also confirms the significant effect of the quality of accounting information on the relationship between political connections and tax avoidance and strengthens the robustness of the results. According to the research findings, the quality of accounting information is an effective tool in controlling tax avoidance activities and weakens the relationship between political connections and tax avoidance.