Abstract

Cash is critical and main factor in any economic unit. Several factors affect on the cash holding. One of these factors is tax avoidance policies. Therefore the main objective of this study Investigating the Relationship between Tax Avoidance and Cash Holding for companies at Tehran Stock Exchange (TSE), and also whether the Relationship between Tax Avoidance and Cash Holding for firms that face with financial constraint is stronger? The index that used to tax avoidance is difference between accounting profit and taxable profit. The study sample consists of 75 Firms listed in Tehran stock Exchange during the 2002 to 2012 and for testing the hypothesizes of this research, regression method and Ordinary Least Squares (OLS) technique was used for panel data. The results show that there is a significantly positive relation between corporate tax avoidance and cash holding. In other word the results show that firms that avoids to pay tax, have more cash. Also this relationship for firms that face with financial constraint is stronger.