An Investigation into the Relationship between Corporate Tax Avoidance and Firm Cash Holdings and its Valuation

This study examines the relationship between corporate tax avoidance and firm cash holdings and its valuation. Corporate tax avoidance limits payments made to the tax authorities. But it also restricts the flow of firm specific information and thereby exacerbates manager-shareholder conflict of interest. If investors perceive tax avoidance as enabling diversion of firm resources، it should negatively impact their valuation of firm cash holdings. The research period includes 1381 to 1388. And the research sample includes 103 Listed Companies in Tehran Stock Exchange. Our findings show a negative relationship between tax avoidance and firm cash holdings and its valuation.