M.A. Thesis:

Firm’s Life Cycle and Tax Avoidance

This study investigated the theoretical role of the company’s life cycle in explaining tax avoidance considering the stagnation stage as the basis stage and devising four hypotheses based on appearance, maturity, growth and decline stages of the company’s life cycle. In order to answer these hypotheses, 106 companies were selected as the sample among the companies accepted in Tehran stock market by using the elimination method during 2009-2015. Model design and selection of variables were conducted according to the related theoretical fundamentals. The life cycle stages of companies were determined from Dickenson method (2011), while the tax book difference was considered as a representative for tax avoidance. This study aims to examine the relationship between the life cycle and tax avoidance in Tehran stock market and in fact to analyze the theoretical role of the life cycle in explaining tax avoidance which is critical at this point. In addition, in order to estimate the regression model, stochastic effects were selected as criteria based on the F-limer test, Panel method and Hausman test. For this purpose, model fitness was conducted by using the Panel method with stochastic effects finallg Estimation results of the regression model show that tax avoidance may be tracked via various stages of the company’s life cycle. In fact, the company’s life cycle theory is able to explain companies’ involvement in tax avoidance. Tax avoidance in appearance and decline stages is more than the stagnation stage, while in growth and maturity stages; it is less than the stagnation one

Keywords: company’s life cycle, appearance stage of life cycle, growth stage of life cycle, maturity stage of