Empirical Research on the Relationship between Earnings Quality and Tax Policies of Companies

This research is aimed at studying the relationship between the earning quality of companies and the tax policies adopted by them. The statistical population for the research included 130 companies recognized by the Tehran Stock Exchange. The accounts of the selected companies from 2008 to 2012 were studied and the simple linear regression model and the logistic regression model were also used to examine the research assumptions. In this research, the tax policies of the selected companies were analyzed by identifying the differences between the declared tax and assessed tax figures as well as studying the relationship between tax provision deficit and earnings persistence. The results of the research indicated that a bigger difference between declared tax and assessed tax leads to a lower earnings persistence in companies. Moreover, in companies whose tax provision deficit is reported by an independent auditor, earnings persistence is lower. Therefore, companies with aggressive tax policies and tax files submitted to tax conciliation boards on an annual basis have a lower earning quality, which can be considered a disadvantage by investors assessing the performance of the company.