Journal of Tax Research

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This paper encompasses the study of relationship between aggressive financial reporting and size of corporations as well as their influence on adopting aggressive tax policies by the companies. Aggressive financial reporting has been measured through Earning Management Variable and existence of tax aggressive policies has been evaluated via recognition of tax differentiations between companies and National Tax Administration. The study was made upon 102 companies among those accepted in Tehran Securities and Exchange Organization, for the time period of 2008- 2011, including all industries except banks and financial institutions. The applied statistical method was Logistic Regression with confidence level of 95 percent. The results showed that, in those companies with higher discretionary accrual items (as a substitute for tax aggressive policies), the difference between the amount of self- declared tax and tax assessed by tax officials is more, and tax differentiation between the companies were mainly due to tax exemptions, specified in Articles 138 and 132 of Direct Taxation Act. This was seen more in bigger size corporations. The studies also made it clear that another difference between the amount of self- declared tax and tax assessed by tax officials especially in average and smaller corporations was related to the rejection of some costs due to Articles 147 and 148 of Direct Taxes Act.

Keywords: Aggressive Financial Reporting, Size of Corporation, Aggressive Tax Policies

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