Journal of Tax Research

Effective Tax Rate as one of the indicators of tax efficiency has always been one of the important issues of research in economics and accounting. This rate has extensive applications in economic decisions and policy making in addition it can also be used as a tool for guiding investment. The purpose of this study, is to evaluate the impact of effective tax rate on dividend policy of listed companies on the Tehran Stock Exchange. The study sample included 450 year-firm observation that related to companies listed in Tehran Stock Exchange during the period 1380-1389. For data analysis and hypothesis testing, linear multivariable regression model based on panel data has been used. In this study, ratios of dividend to net sales and tax expenses to net profit before tax have been used to measure corporate dividend policy and effective tax respectively. The research result shows a negative and significant relationship between effective tax rate and dividend policy. In other words, with an increase in effective tax rate, the companies reduce their dividend significantly.