The Moderating Effect of Corporate Governance on the Relationship Between Independent Audit Quality and Tax Gap

The purpose of the present study is to investigate the moderating effect of corporate governance on the relationship between the quality of independent audits and the tax gap in companies listed on the Tehran Stock Exchange.

A multivariate regression method based on combined data was used for data analysis. The statistical population of the research comprises the companies listed on the Tehran Stock Exchange and OTC.

The findings of the first hypothesis of the research show that there is a negative and significant relationship between the quality of independent auditing and the tax gap. In other words, increasing the quality of independent auditing reduces the tax gap. The results of the second hypothesis indicate that the moderating effect of corporate governance on the relationship between independent audit quality and the tax gap is positive and significant. This means that with the increase in corporate governance, the relationship between the quality of independent auditing and the tax gap intensifies.

To accurately diagnose tax issues, the Tax Administration should focus on the tenure and continuity of the relationship between audit institutions and companies. Companies can also utilize expert auditors from auditing organizations and seek accreditation from "A" rated institutions to enhance the quality of reported profits and earn investors' trust. The research's second hypothesis indicates a lack of proper corporate governance in Iran, suggesting the need to enhance corporate governance criteria as a monitoring mechanism.