The Impact of Financial Statement Disclosure Quality and Audit Committee Competence on Reducing Tax Avoidance: A Combined Approach of Qualitative Content Analysis and Quantile Panel Data Modeling with Generalized Method of Moments (GMM)

Tax avoidance, a significant challenge in tax systems, profoundly impacts the macroeconomy and corporate performance. This study investigates the effect of financial statement disclosure quality and audit committee competence on reducing tax avoidance in companies listed on the Tehran Stock Exchange. Disclosure quality, as a cornerstone of financial transparency, can curb tax avoidance behaviors by reducing information asymmetry and enhancing oversight. Similarly, audit committee competence contributes significantly by improving financial process monitoring and minimizing opportunities for misuse. A mixed approach of qualitative content analysis and quantile panel data modeling with the Generalized Method of Moments (GMM) was employed. Data were collected from 157 listed companies over the period from 1395 to 1402 (2016–2023). Variables including tax avoidance, disclosure quality, and audit committee competence were operationally defined and measured. Disclosure quality was assessed using indices based on financial reporting standards, while audit committee competence was evaluated through criteria such as independence, financial expertise, and meeting frequency. Tax avoidance was measured using the effective tax rate and the difference between accounting and taxable profits. Qualitative content analysis revealed that companies with higher disclosure quality and more competent audit committees exhibit less inclination toward tax avoidance strategies. Quantile panel data modeling with GMM confirmed that disclosure quality and audit committee competence have a significant negative impact on tax avoidance, particularly in firms with concentrated ownership structures. These findings align with agency and signaling theories, emphasizing the role of transparency and oversight in mitigating opportunistic behaviors. The results can assist tax policymakers and capital market regulators in designing effective regulations to reduce tax avoidance. Furthermore, corporate managers are recommended to enhance disclosure quality and audit committee competence to build investor trust and mitigate tax avoidance risks. By integrating qualitative and quantitative methods, this study offers a comprehensive perspective on the issue.