Investigating the relationship between tax avoidance and investment efficiency considering managerial ability of companies listed on the Iraq stock exchange

Subject Areas : Investments

Sura Rabah Awad ¹ , Masood Fooladi ^{2 *} , Layth Noaman Hassoon ³ , Saeid Sharifi ⁴ , Maryam Farhadi ⁵

1 - Department of Accounting, Isf.C., Islamic Azad University, Isfahan, Iran.
2 - Department of Accounting, Isf.C., Islamic Azad University, Isfahan, Iran.
3 - Department of Accounting, Faculty of Management and Economics, Tikrit University, Tikrit, Iraq.
4 - Department of Cultural Management and Planning, Isf.C., Islamic Azad University, Isfahan, Iran.
5 - Department of Accounting, Isf.C., Islamic Azad University, Isfahan, Iran.

Received: 2024-10-26 Accepted : 2025-06-11 Published : 2025-06-23

Keywords: Investment Efficiency, Managerial Ability, Tax Avoidance,

Abstract :

Purpose: This study aims to examine the moderating role of managerial ability in the relationship between tax avoidance and investment efficiency among firms listed on the Iraq Stock Exchange.

Research Methodology: To test the hypotheses, the study employs multiple regression models using panel data. The research population includes companies listed on the Iraq Stock Exchange from 2013 to 2022, out of which 41 firms were selected through a systematic elimination method.

Findings: The results indicate that increased tax avoidance leads to higher underinvestment. Moreover, in firms with higher levels of managerial ability, the level of overinvestment tends to decrease in response to increased tax avoidance, thereby improving investment efficiency.

Originality / Value: While Khodamipour et al. (2020) examined the effect of managerial ability and tax avoidance on investment efficiency in the Tehran Stock Exchange, the present study takes a novel approach by classifying the sample into two distinct groups—firms with overinvestment and those with underinvestment—within the context of the Iraq Stock Exchange. This classification leads to differentiated findings that contribute new insights into the role of managerial ability in emerging markets.

 

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