Investigating the moderating role of information asymmetry on the relationship between tax reducing policies and earnings quality in companies listed on the Tehran Stock Exchange

The purpose of this study is to investigate the moderating role of information asymmetry on the relationship between tax reduction policies and earnings quality

In order to achieve the purpose, a sample consists of 120 listed companies on the Tehran Stock Exchange during 2010 to 2019 (1200 observations) was selected and the hypotheses were tested using multivariate regression models.

Findings show that there is an inverse and significant relationship between tax reduction policies and earnings quality and the information asymmetry exacerbates this relationship.

The existence of tax incentives to reduce taxable income affects the earnings quality and provides platform of managerials opportunistic actions in the information asymmetry circumstance.Originality/value: In the presence of information asymmetry, increases the risk of declining taxable profits through the application of tax-reducing policies, so earnings quality can be considered as an important factor for risk management in the field of tax accounting.