Moderating Effect of Information Environment on the Relation between Accounting Comparability and Tax Avoidance

Accounting comparability enables tax authorities to obtain a better understanding of corporate activities and improves their recognition of tax avoidance behaviors and thus it plays a crucial role in curbing managerial incentives and abilities in committing tax avoidance. Based on the arguments, this study is aimed to investigate the relation between accounting comparability and corporate tax avoidance, and to examine the moderating effect (substituting or replacing) of information environment on this relation, using structural equation modeling approach. As a quantitative, correlational and applied study, this research employs a sample of 86 firms listed in Tehran Stock Exchange during the years 2012-2016. The PLS software is adopted to analyze the collected data. Three various measures based on the model proposed by DeFranco et al (2011) are employed to evaluate accounting comparability, and two proxies of book-tax difference and effective tax rate are used to compute tax avoidance. Results reveal that accounting comparability tends to mitigate corporate tax avoidance behaviors. Moreover, in line with the predictions of substitutions theory, the findings suggest that information environment weakens the negative correlation between accounting comparability and corporate tax avoidance.