Investigating the Impact of Information Voluntary Disclosure on the Relationship between Tax Aggressiveness and Information Asymmetry

Document Type : Research Paper

Authors

1 PhD Student of Accounting, Mazandaran University, Babolsar, Iran.

2 Associate Professor of Accounting, Mazandaran University, Babolsar, Iran.

3 Professor of Accounting, Mazandaran University, Babolsar, Iran.

10.22103/jak.2021.16602.3344

Abstract

Objective: Voluntary disclosure of information reduces the uncertainty of the information environment, thereby increasing information asymmetry and investor confidence in the management of the company, and businesses that have more Tax aggressiveness activities may increase their disclosure to eliminate information uncertainty and information asymmetry. On the other hand, voluntary disclosure of information can clarify the goals of Tax aggressiveness activities and the motivation for the benefit of individuals within the organization. Agency theory introduces voluntary disclosure as a mechanism to assure managers of stewardship and support for shareholders and may reduce the company's opportunistic behavior and reduce information asymmetry. Accordingly, voluntary disclosure of information is expected to affect the relationship between Tax aggressiveness activities and information asymmetry. In fact, voluntary disclosure quality can prevent management opportunities from pursuing their own personal interests through policies and Tax aggressiveness activities, reducing information asymmetries and thus increasing information transparency. Empirical evidence shows that voluntary disclosure of information can moderate the relationship between Tax aggressiveness activities and information asymmetry. More importantly, disclosure of companies' information has an impact on their analysis and consequently management forecasting and at the same time play an important role in reducing information asymmetry. As a result, Tax aggressiveness policies increase information asymmetry at the company level by ambiguity and complicating the information situation, and then voluntary disclosure can reduce the company's opportunistic behavior and reduce information asymmetry. Therefore, this study aims to examine the moderating effect of voluntary disclosure on the relationship between tax aggressiveness and information asymmetry.
 
Method: This research is an experimental research method of post-event type and is in the category of positivist approaches. Statistically, it is a correlational research and we utilized multivariate linear regression to test research hypotheses. The information collected is based on actual stock market information, financial statements and notes accompanying corporate financial statements.To achieve the purpose of the research, 174 companies listed on the Tehran Stock Exchange during the period 2012-2018 are examined. To test the hypotheses, the method of panel data analysis and multiple linear regression are used.
 
Results: The research findings show that there is a positive and significant relationship between tax aggressiveness and information asymmetry. In addition, these findings indicate that voluntary disclosure of information does not have a significant effect on the relationship between tax aggressiveness and information asymmetry.
 
Conclusion: Tax planning increases the value of the company through tax savings, but if this planning is too aggressiveness, it leads to the downfall of the company and this leads to ineffective communication with shareholders and creditors of the company. In such circumstances, the problems are caused by information asymmetry become more apparent. On the other hand, managers are expected to use voluntary disclosure to reduce the negative effects of complex financial statements and the information environment, But in the case of Iran, due to capital market inefficiencies and limited cases of voluntary disclosure of information by companies, the quality of voluntary disclosure of information is not necessarily sufficient to have a significant impact.

Keywords

References

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History

  • Receive Date: 10 October 2020
  • Revise Date: 03 January 2021
  • Accept Date: 10 March 2021

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