Tax Planning and Earnings Management Strategies Across Political Systems: Corporate Governance Mechanisms Moderate Corporate Tax Burden

Arshed Makki Rashed

doi:10.47134/jred.v3i2.1097

Authors

Arshed Makki Rashed University of Al Qadisiyah

DOI:

https://doi.org/10.47134/jred.v3i2.1097

Keywords:

Tax, Planning, Tax Burden, Corporate Governance, Political System, Earning management, Iraq, Panel

Abstract

This study looks at how tax planning affects corporate tax burdens in an emerging economy like Iraq, including the mediating role of earnings management, the moderating effects of corporate governance mechanisms, and the political system. Based on agency, corporate governance, and institutional theories, this study examines panel data (2010-2023) from 30 non-financial enterprises registered on the Iraq Stock Exchange. Our findings indicate that both the effective tax rate and earnings management have a considerable favorable influence on cash tax burden. More crucially, board independence and the rule of law have a considerable impact on these connections. Specifically, board independence increases the positive association between effective tax rate and cash tax burden while decreasing the positive relationship between earnings management and cash tax burden. Similarly, the rule of law reduces the positive association between earnings management and cash tax burden, implying that strong governance and institutional frameworks restrict managers' flexibility in tax-related financial reporting. This study adds to the emerging markets literature by giving fresh insights into the interaction of internal and external restrictions on corporate tax behavior in a difficult institutional context. These findings have practical consequences for policymakers, investors, and managers looking to improve transparency and stability in such economies.

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