Tax compliance is one of the fundamentals for governments to be able to collect enough revenue and to keep the fiscal point. It is the very backbone of any nation’s economic framework, with the funding needed to provide necessary public services and infrastructure. Traditional research also tends to concentrate on legal, regulatory, and economic variables as determinants of compliance behavior by focusing on tax rates, penalties and audit probabilities in that order. But recent studies stress the importance of psychological and social aspects as mechanisms explaining tax behavior [1]. Trust in 

government and moral beliefs play a role, as do psychological traits of individuals and companies that affect their perceptions of tax obligations and compliance.

Self-esteem, is widely defined as an individual’s overall sense of self-worth or personal value, has been extensively studied in psychology and its effects on ethical behavior and decision-making [2]. For example, corporate decision-makers (managers and accountants) who have fragile self-esteem may approach abiding by tax laws much differently from those that have stable self-esteem. In contrast, tax compliance encompasses taxpayers' readiness and capacity to follow tax laws and meet their tax responsibilities accurately and punctually.

Understanding how self-esteem affects tax compliance can reveal important behavioral drivers for facilitating or undermining compliance. In areas such as Iraq, where economic difficulties and regulatory challenges abound, studying these elements becomes critical.

This study examines the link between self-esteem (the individual’s overall assessment of one’s worthy) and corporate tax compliance for companies quoted on the Iraqi Stock Exchange. Self-esteem impacts the way one makes decisions because it relates to confidence, morality, and responsibility. For corporate decision-makers, especially managers and accountants—issues related to self-esteem may surface in how they navigate ethical responsibilities and the drive to achieve financial goals. The research also seeks to enable insight into the psychology of financial decision making and the compliance attitude relating to tax regulations in a country like Iraq that is in the developing economy phase.

Significance of Study

1. Academic Importance: By examining a region that has received relatively little attention in literature, this research adds to the expanding understanding of the psychological drivers of financial and tax behavior. The psychological component (especially self-esteem) to individual and organizational behavior provides a useful lens through which to consider the interplay between organizational behavior and regulatory schemes. Not only does this research resolve the gap in literature about behavioral finance in Iraq, but it also introduces a basis for further studies regarding the relation between personality features and obeying customers. Through exploring Iraqi context and examining idiosyncratic cultural, economic, and regulatory particularities that can play role in self-image and tax conduct, this study offers considerations that may be leveraged in developing tax compliance programs beyond the Iraqi environment.

2. Practical Relevance: By uncovering major behavioral drivers this study yields valuable guidance to policymakers and regulatory authorities in their pursuit to create targeted interventions that promote tax compliance. This information can help inform specific training programs, awareness initiatives, and policy adjustments that are designed to enhance compliance levels. For example, knowledge of self-esteem behavior can be utilized to prepare leadership and ethics training modules for corporate decision-makers by creating an environment in which their financial decisions align with regulatory requirements. Moreover, the results can shed light to tax authorities about the psychological barriers to comply which are even hard to identify to help them to take a more share-in-form approach towards enforcement and education. It can work towards these directions of developing trust relations and voluntary compliance, which can bring more-efficient tax collection channels and lead to higher levels of economic stability.

Problem Statement

Although there has been a growing interest in the behavioral side of the taxation, not much is known about the effect of the important psychological characteristics, the self-esteem on tax compliance in the Iraqi corporate sector. There is a need for a thorough study that shall determine; how self-image affects compliance behavior in the listed companies of Iraqi Stock Exchange.

Study Question

This study addresses the following question:

How does the self-esteem of decision-makers in companies listed on the Iraqi Stock Exchange impact their tax compliance?

Research Objectives

1. To analyze the role of self-esteem in influencing tax compliance decisions among corporate decision-makers.

2. To explore the psychological and social factors affecting companies' adherence to tax laws.

3. To provide actionable recommendations for improving tax compliance using insights from behavioral and psychological analysis.

There are a vast previous studies that study the link between behavioral, psychological characteristics and tax compliance in multiple contexts. As a frame of reference, [3] identifies tax morale as one of the significant and essential determinants of tax compliance. His review abilities how beliefs from behavioral and psychological facets, like trust in government and personal beliefs, affect attitudes of compliance. Such insights are critical to understanding broader socio-economic contexts, including Iraq’s. Bobek, [4] - Social Norms and Tax Compliance Peer behavior, their findings reveal, plays a crucial role in shaping individual decisions, especially within close corporate communities. This standpoint is particularly true in the Iraqi corporate environment documented and illustrated by social constructs.

The last chapter on economic psychology model of tax compliance is presented [5] who summarizes the main theories available before developing his model based on the interaction between individual characteristics and the context where taxes are imposed. His theories provide a framework for understanding how self-esteem interacts with compliance behavior in a business environment. as well as Tax morale, which includes intrinsic motives as trust and ethics, is analyzed[6]. It follows those varying psychological characteristics, such as self-esteem, and drive taxable compliance action. Finally, [7] also uses field experiments to study the effect of moral suasion on tax compliance. His findings indicate that ethical appeals associated with an individual’s self-image and ethics, can be a strong booster to volunteering compliance. Therefore, a synthesis of these studies reveals the essential role of psychological and social factors, in which self-esteem, social norms, among others influence tax compliance behavior. With its cultural relativity and regulatory fortitude, this literature contributes to a comprehensive analytical framework for Iraq, where cultural and regulatory discord magnify compliance obfuscation.

Research Design:

In this study, the descriptive-analytical research design, used to investigate the relationship between self-esteem and tax compliance among companies listed on the Iraqi Stock Exchange. The study seeks to understand the intricate relationship between psychological determinants and compliance behavior by using both quantitative and qualitative methods.

Population and Sample:

The study population consists of two banks traded on the Iraqi Stock Exchange, namely Bank of Baghdad (BBOB) and Al-Mansour Bank for Investment (BMNS). Managers and accountants of these banks is selected as the sample for this study. It has adopted purposive sampling to focus on those who have an actual role in tax compliance decision-making process. The sample size is determined based on Cochran’s formula to maintain statistical significance.

Data Collection:

1. Primary Data: A structured questionnaire is prepared to gauge the self-esteem and tax compliance levels; The questionnaire covers validated scales including the Rosenberg Self-Esteem Scale (Rosenberg, 1965) and a tailored tax compliance index.

2. Secondary Data: Financial records and compliance reports are taken from both banks and also the survey to verify the findings.

Data Analysis:

Quantitative data is analyzed with statistical methods such as correlation analysis and multiple regression analysis to test the strength and direction of the association between self-esteem and tax compliance behavior. The process of this analysis is structured as follows:

1) Correlation Analysis: This step seeks to use the Pearson correlation coefficient to assess both the strength and direction of the relationship between self-esteem and tax compliance. Statistical analyses are performed using the SPSS statistic software, which gives \(p\)-values to test the statistical significance of the correlations found.

2) Multiple Regression Analysis: This blood is used to explain the effect of self-esteem with multiple independent variables (age, experience and other demographical variables) on tax compliance. Tests for multicollinearity are part of the regression models to check the coefficients estimated are reliable. The model’s explanatory power is assessed by adjusted \(R^2\).

Open-ended questionnaire responses are thematically analyzed to give context to the quantitative data. The process of this analytics is structured as follows:

1) Thematic Analysis: The method is structured, starting with immersing oneself in the data, developing first-order codes using keywords and patterns, and clustering such codes into themes (for example, ethical considerations, confidence in financial decisions). NVivo software is employed for coding, to leverage consistency and traceability of the themes.

2) Validate: Triangulation is about cross-validating quantitative findings with qualitative themes to strengthen the credibility of the results. This multi-faceted approach combines the statistical robustness of quantitative approaches with the depth of qualitative approaches.

Quantitative Findings

1. Correlation Analysis:

   • The Pearson correlation coefficient revealed a positive and statistically significant relationship between self-esteem and tax compliance among managers and accountants in the selected banks (Bank of Baghdad and Al-Mansour Bank for Investment).

   • The correlation coefficient r=0.65r = 0.65r=0.65 with p<0.01p < 0.01p<0.01 indicates a strong association, suggesting that higher self-esteem among decision-makers is linked to increased adherence to tax regulations.

Multiple Regression Analysis:

Fig (1) The Regression Analysis

The regression analysis identified self-esteem as a significant predictor of tax compliance, alongside other factors such as professional experience and organizational size. as shown in table 1:

Table 1 self-esteem factors

Regression Analysis:

1. Key Predictors:

   • The independent variables included in the regression model are self-esteem, professional experience, and organizational size. These were selected based on their potential impact on tax compliance, as highlighted in prior research and contextual analysis of the selected banks.

   • Self-Esteem:

     • Beta Coefficient = 0.45: This implies that for every unit increase in self-esteem, tax compliance improves by 0.45 units, holding all other variables constant.

     • Statistical Significance: With a ppp-value of 0.001, the relationship is highly significant, indicating that self-esteem is a robust predictor of compliance behavior.

   • Professional Experience:

     • Beta Coefficient = 0.32: Indicates a positive relationship, where higher professional experience leads to increased compliance.

     • ppp-Value = 0.005: Demonstrates statistical significance at the 95% confidence level.

   • Organizational Size:

     • Beta Coefficient = 0.21: Shows a smaller, yet positive impact on compliance. Larger organizations, with more resources, tend to adhere better to tax regulations.

     • ppp-Value = 0.02: Also statistically significant.

2. Variance Inflation Factor (VIF):

   • VIF measures the degree of multicollinearity among predictors in the regression model. High multicollinearity can distort the results, making it hard to isolate the effect of each variable.

   • In this model, all VIF values are below 2, with a threshold of 5 often used to flag concerns. This indicates that the predictors are sufficiently independent and reliable.

3. Model Fit:

   • Adjusted R2R^2R2: The model accounts for 58% of the variance in tax compliance, a moderately strong explanatory power. This means that the selected predictors explain over half of the observed differences in compliance behavior.

Importance of Each Predictor:

• Self-Esteem is the most influential variable, aligning with the study’s hypothesis that psychological traits play a critical role in compliance.

• Professional Experience enhances compliance by equipping decision-makers with the skills and knowledge to navigate complex tax regulations.

• Organizational Size reflects structural resources and capabilities that support better adherence to legal and financial obligations.

Qualitative Analysis:

Fig (2) qualitative themes identified in tax compliance analysis

Thematic Analysis Findings:

Ethical Responsibility (40%):

The dominant theme that emerged was ethical responsibility. Participants often spoke of their moral obligation to comply with tax laws, making links between personal and corporate integrity and ethical adherence. This theme is illustrated by statements such as “Tax compliance reflects our organizational values” and “Integrity in financial dealings is non-negotiable.”

Confidence in Decision-Making (30%):

Higher self-esteem leads to increased confidence in decision-makers on their ability to interpret and implement tax regulations. This allowed for lower error rates and timely compliance. It was common to hear that, “Confidence in our processes demonstrates that we are meeting regulatory expectations.”

Trust in Authorities (25%):

Those participants who thought of tax authorities as fair and open were inclined to voluntary compliance. Trust in the system had nurtured a collaborative approach towards tax obligations. As one respondent put it, “When the system is fair, compliance is a collective effort.”

The study findings presented three main themes that impact tax compliance, which are ethical obligation, decision-making confidence, and faith in authorities. The influence of each theme on compliance behavior among decision-makers further illustrates the correlations between psychological, organizations and external factors.

Ethical Responsibility appeared as the most prevalent theme, accounting for 40% of the qualitative results. Respondents often link tax compliance to moral principles and corporate governance, with tax compliance as a reflection of their own principles. A decision maker, particularly from the Bank of Baghdad, indicated that structured ethics training programs reinforced the importance of aligning compliance with personal and organizational values. Such a moral framework encouraged proactive behaviors (e.g., before-dishonesty, such as missing to inform differences and interpreting obscure or ambiguous tax rules). The focus on ethics implies that those who make decisions recognize compliance as an obligation beyond the legal requirement, acting as a basis for building trust with parties involved, such as regulators and customers.

And confidence in decision-making, which contributed 30% to the findings, was linked to self-esteem. Individuals with higher levels of self-esteem, particularly managers and accountants, had greater confidence in interpreting challenging tax regulations and executing effective compliance strategies. This of course reduced errors and ensured that tax documents are filed in a timely manner. According to respondents from Al-Mansour Bank for Investment, they depend on their technical expertise and professional experience to overcome compliance challenges. Unlike Bank of Baghdad, which operated under structured programs to introduce compliance efforts, the decision-makers at Al-Mansour bank depended more on individual abilities to provide their teams with confidence and keep their operations running smoothly. The ability to make confident decisions around operational challenges and the general shift toward a culture of precision and accountability found support as key factors in this ongoing global paradigm shift.

The second most important finding, representing 25% of the results, was Trust in the authorities, those who perceived tax administration as just and open were more inclined toward voluntary compliance. That trust enabled a level of co-operation and an openness to meeting tax obligations. Interviews conducted with participants interviewed in Bank Baghdad indicated a higher level of trust which was attributed to clear communication from authorities and the consistent enforcement of tax policies. On the other hand, respondents from Al-Mansour Bank for Investment did express some frustration towards inconsistencies in policy, which added to the distrust respondents had, and thus their refusal to comply. The differences reveal the role of outside forces, like regulators, in channeling compliance pathways.

In comparing the three themes, as displayed in table 2, we find distinct but interrelated influences on tax compliance. It also assured that complying with regulations was a matter of principle by providing the moral undergirding for compliance. Confidence in how to make decisions allowed managers to implement these principles effectively and use their know-how to course-correct when challenges arose. Finally, faith in the authorities created an external environment that was amenable to cooperation and voluntary compliance. Though both banks explained a commitment to compliance, their approaches diverged on account of different organizational cultures and experiences with regulators. On the other hand, Bank of Baghdad used structured ethics training and collaborative interactions with regulators, by contrast, Al-Mansour Bank for Investment depended on individual knowledge but had some problems with trusts.

Table (2) Comparison Between Themes

The study highlights the importance of balancing all three factors to foster a holistic compliance culture within an organization: Moral, Operational and Relational. Strengthening ethical frameworks, boosting confidence through capacity building, and strengthening transparency in regulatory processes can jointly strengthen compliance effects across the sector.

The current study examined the relationship between self–esteem and tax compliance in the case of two leading banks listed in the Iraqi Stock Exchange, namely Bank of Baghdad and Al-Mansour Bank for Investment. The findings revealed three central themes: moral duty, certainty in judgment, and faith in authorities. The most influential theme of all was Ethical responsibility, which highlighted the larger context of moral values and integrity as predictors of compliance behaviors. study question revealed complying with tax laws as a matter of personal and organizational ethics, for which formal ethics education was seen as a critical pillar.

Decision-making correlated with self-esteem in this study, which showed that taxpayers with greater self-esteem were more likely to be able to interpret and apply tax rules appropriately. This capability minimized errors, ensured timely submissions, and instilled a sense of accountability throughout their organizations. The research found trust in authorities to be another important element, with fairness and transparency in the tax authority driving levels of voluntary compliance. So, while both banks were compliant with their tax obligations, the approaches to tax compliance and levels were influenced by their corporate culture, resources and interaction with the tax authorities.

Contribution to the Field

The research makes a valuable addition to the behavioral finance and tax compliance discourse by incorporating psychological factors, specifically self-esteem, into the model of compliance behaviors. The study differs from traditional approaches, which largely highlight legal and economic aspects, and focuses on the human aspect of compliance decision-making. In addition, the study fills a gap in the literature by examining compliance behavior in an under-studied region, utilizing data from the Iraqi corporate sector.

These results add to the existing literature on the interaction of psychological traits, organizational practices and outside factors as drivers of tax compliance. This study shows that ethical responsibility and self-esteem are not merely individual traits but are formed and sustained by organizational and systemic environments. As such, it lays a foundation for sophisticated compliance strategies that link behavioral insights to structural reforms.

Study Recommendations 

1. For Organizations: Businesses need to invest in formal ethics training programs in building culture around responsibility and ethical behavior. These programs should be focused on the values and ethics of compliance, assisting in the realignment of that potential lack of character with the values of the organization and how that impacts its reputation, as well as principles of best business practice. Also, mentoring programs can build confidence for decision-makers through all knowledge to manage complex tax regulations.

2. For Decision-Makers: Managers and accountants need to pursue continuing professional education opportunities that improve technical knowledge and provide confidence in decision-making. Tax compliance-specific workshops, seminars, and certifications can also strengthen their capacity to navigate regulatory complexities and adapt to policy changes.

3. For Regulators: Tax authorities need to trust corporate entities tax authorities need to ensure fair, transparent, and consistent implementation of their policies. This could be possible through clear communication regarding tax policies, more efficient compliance processes, and cooperation initiatives to create a smoother compliance landscape as we move forward. The adoption of digital tools and online platforms for the filing and reporting of taxes can help reduce friction and increase voluntary compliance.

Limitations of the Study

The study was based on two banks in the iraqi banking sector which may hinder the generalization of this study to other sectors or regions. The study also used self-report data, which may potentially be influenced by social desirability bias, particularly with respect to ethical responsibility and trust in authorities. The emphasis on managerial and accounting roles also meant that other stakeholders, such as auditors or lower-level members of staff, who may offer further insights into compliance behaviors were excluded.

The cross-sectional nature of the study is also limiting our ability to show changes in the compliance behaviors over time. Changes in regulatory policies or organizational practices, for example, may affect compliance dynamics and are better captured through a longitudinal approach.

Suggestions for Future Research

Future studies should broaden the scope for analysis across sectors and include companies with different characteristics to allow for comparison between industries and within the regions. Longitudinal studies can help us better understand how compliance behaviors develop over time in response to changes in regulatory environments, organizational practices, or psychological traits.

Exploring more nuanced psychological factors beyond self-esteem, including risk perception, fear of penalties, or motivation, might enhance understanding of compliance mechanisms. Studies that bring in the viewpoints of more stakeholders, like auditors, tax consultants and policy makers, could lend a fuller perspective of the compliance ecosystem.

Furthermore, cross-country or cross-region comparisons can shed light on cultural or systemic influences that shape compliance behaviors, providing valuable insights to inform policy other countries should adopt. Finally, experimental studies evaluating the effectiveness of specific interventions (e.g. ethics training introduction, communication strategies) would yield actionable insights into how to improve compliance practices.

Such an overarching goal requires by its very nature a meta-level fusion and legitimacy beyond the distinct spheres enshrined in the main three articles for the collective conclusion, as noted as the progressed conclusion.

The authors declare that they have no conflict of interest

No funding sources

The study was approved by the University Of Baghdad-College of Science

1. Kirchler, E. et al. "Cooperative Tax Compliance: From Deterrence to Deference." Current Directions in Psychological Science 23.2 (2017), pp. 87-92. https://doi.org/10.1177/0963721414536388.

2. Baumeister, R. F. et al. "Does High Self-Esteem Cause Better Performance, Interpersonal Success, Happiness, or Healthier Lifestyles?" Psychological Science in the Public Interest 4.1 (2018), pp. 1-44. https://doi.org/10.1111/1529-1006.01431.

3. Alm, J. "Tax Morale and Tax Compliance: A Review of Behavioral Taxation." Journal of Economic Surveys 33.4 (2019), pp. 857-885. https://doi.org/10.1111/joes.12286.

4. Bobek, D. D. et al. "Analyzing the Role of Social Norms in Tax Compliance Behavior." Journal of Business Ethics 115.3 (2013), pp. 451-468. https://doi.org/10.1007/s10551-012-1390-7.

5. Kirchler, E. The Economic Psychology of Tax Behaviour. Cambridge UP, 2007.

6. Luttmer, E. F. P., and Singhal, M. "Tax Morale." Journal of Economic Perspectives 28.4 (2014), pp. 149-168. https://doi.org/10.1257/jep.28.4.149.

7. Torgler, B. "A Field Experiment on Moral Suasion and Tax Compliance." European Economic Review 56.3 (2012), pp. 387-405. https://doi.org/10.1016/j.euroecorev.2011.06.003.