Tax avoidance and geopolitical risk: evidence from Turkey

Authors : Çağrı Aksoy Hazır

Pages : 1-15

Doi:10.58588/aru-jfeas.1581264

View : 79 | Download : 64

Publication Date : 2025-06-20

Article Type : Research Paper

Abstract :The objective of the study is to identify how geopolitical risk (GPR) influences tax avoidance behavior in Turkey over the period of 2007-2022. The findings of the study, which integrates financial and GPR data and runs panel data analysis, reveal that GPR has a detrimental effect on firms’ tax avoidance activities. The negative relationship between tax avoidance and GPR is consistent with the agency theory view of tax avoidance. According to the agency theory view of tax avoidance, this finding suggests that Turkish firms do not prefer to engage in tax avoidance activities when GPR arises since saving cash through tax avoidance increases agency costs. A series of robustness tests with alternative measures of tax avoidance and GPR also provide evidence that an increase in GPR leads to lower engagement in tax avoidance both in the short run and long run. According to the findings, policymakers should evaluate the economic impacts of GPR and promote good governance practices to improve tax system efficiency and reduce tax avoidance costs, while managers should address agency problems to maximize the value-enhancing benefits of tax avoidance.
Keywords : Vergiden Kaçınma, Jeopolitik Risk, Vekalet Teorisi, Panel Veri

ORIGINAL ARTICLE URL