According to the information view, the main function of accounting is to provide information and thus reduce uncertainty. So, the high internal information environment quality (IIEQ) reduces the corporate declared tax disagreement by tax auditors due to facilitating tax planning coordination between different departments of the company and providing documents to tax authorities. The purpose of this study is to investigate the impact of IIEQ on tax risk reduction in listed companies in Tehran Stock Exchange (TSE) by applying data collected from 136 companies during the years 2009 to 2015. For this purpose, the difference between the corporate declared and certain tax due to the uncertainty about the confirmation of the declared tax is taken as a tax risk. The results show that environmental uncertainty increases tax risk. Moreover, income quality, income forecasting accuracy, and financial reporting quality and transparency reduce tax risk. Corporate governance quality, is also effective for tax risk reduction. These findings highlight the importance of environmental conditions, measurement process, financial reporting and internal monitoring for tax risk reduction. On the other hand, based on the research findings, companies with lower tax rates have higher tax risks; but conservatism and asset returns don’t make sense for tax risk. Moreover, tax risk is higher in larger companies, and financial leverage, also, increases tax risk. The findings provide new evidence of the IIEQ impact on the corporate tax planning. These findings can be useful in assessing corporate tax risk based on its IIEQ.


  1. [1] Aghaei, M.A., Hassani, H., Asadi, Z. (2017). The importance of the internal information environment for tax avoidance in the companies listed in Tehran Stock Exchange. Financial Accounting Researches,No. 8(4), PP: 17-36 [In Persian]. [2] Akins, B. K., Ng, J., and Verdi, R. S. (2012). Investor Competition over Information and the Pricing of Information Asymmetry. The Accounting Review ,No. 87, PP: 35–58. [3] Aksu, M., Arman, K. (2006). Transparency and disclosure scores and their determinants in the Istanbul Stock Exchange. Corporate Governance: An International Review, Vol.14, No.4, PP: 277-296. [4] Amri-Asrami, M., Aghaei, M. (2017). The Dynamics of Accounting Information in Stock Valuation: An Industry-Based Analysis. Management Research in Iran, No. 21,PP: 29-63[In Persian]. [5] Arab Mazar,A., Taleb Nia, G., Vakili Fard, H., Samadi Largani, M. (2011), Explaining the Relationship between Financial Reporting Transparency and Tax Reporting, Accounting and Auditing Researchs, No. 9, PP:22-37[In Persian]. [6] Babajani, J., Abdi, M. (2010).Relationship between Corporate Governance and Enterprises Taxable Profit. Financial accounting Research, No. 5, PP: 65-85[In Persian]. [7] Badri, A. (2008). Principles and necessity of corporate governance. Corporate governance conference, Tehran Stock Exchange, Training management, Available at: [In Persian]. [8] Beidleman C. (1973). Income Smoothing: The Role of Management. The Accounting Review; No. 48(4), PP: 653-667. [9] Brealey, R. and Myers, S. (1991). Principles of Corporate Finance, Fourth Edition. New York, McGraw-Hill, Inc. [10] Chen, X., Hu, N., Wang, X., and Tang, X. (2014). Tax Avoidance and Firm Value: Evidence from China. Nankai Business Review International, No. 5 (1). PP: 25-42. [11] Child, J. (1972). Organizational structure, environment and performance: The role of strategic choice. Sociology,No. 6, PP: 2–22. [12] Davenport, T. H. (2000). The Future of Enterprise System-enabled Organizations. Information Systems Frontiers. Vol. 2, No. 2, PP:163-180. [13] Dechow, P. (1994). Accounting earnings and cash flows as measures of firm performance: The role of accounting accruals. Journal of accounting and Economics, No. 18, PP:3–42. [14] Degeorge F., Zeckauser, P. (1999). Earning Management to Exceed Thresholds. Journal of Accounting and Economics, No. 12, PP: 23-45. [15] Desai, M. (2003). The divergence between book and tax income, Tax policy and the economy, No. 17, PP:169-206. [16] Feiz, D., Golshahi, B. (2017). Identifying networking human resource Practices effecs on firm performance based on a combinotrial approach: analyzing the role of strategic flexibility and environmental uncertainty, Management Research in Iran, No 21(3), PP:193-215 [In Persian]. [17] Frank, M., Lynch, L., Rego, S. (2009). Tax reporting aggressiveness and its relation to aggressive financial reporting. The Accounting Review, No.84, PP: 467-496. [18] Gallemore, J., Labro, E. (2015). The Importance of the Internal Information Environment for Tax Avoidance. Journal of Accounting and Economics, Vol. 60, No. 1, PP: 149-167. [19] Ghaemi, M., Hosseini, M., Karimi, M. (2014). The Manager's Use of Discretionary Accruals in Environmental Uncertainty. Emprical Research of Financial Accoounting, No. 1, PP: 67-85[In Persian]. [20] Ghosh, D., Olsen, L. (2009). Environmental uncertainty and managers’ us of discretionary accruals, Accounting, Organizations and Society, No. 34, PP:188–205. [21] Givoly, D., Hayn, C. K., Katz, S. P. (2010). Does Public Ownership of Equity Improve Earnings Quality?.The AccountingReview,No.1,PP:195–225. [22] Hesarzadeh, R., Etemadi, H., Azar, A., Rahmani, A. (2016). Modeling of minimizing uncertainty based on accounting data quality proxies. Empirical studies of financial accounting, No. 50, PP: 81-127 [In Persian]. [23] Hoffman, W. H. (1961). The theory of tax planning. The Accounting Review, No. 36(2), PP: 274–281. [24] Klir, G. J., Smith, R. M. (2001). On measuring uncertainty and uncertainty-based information: Recent developments. Annals of Mathematics and Artificial Intelligence , No. 32, PP: 5–33. [25] Lanis, R., Richardson. G. (2011). The effect of board of director composition on corporate tax aggressiveness. Journal of Accounting and Public Policy, Vol. 30, No. 1, PP: 50-70. [26] Mashayekhi, B., Alipanah, S. (2015), The Influence Corporate Governance on Relationship Between Tax Avoidance and Firm’s Value, The Financial Accounting and Auditing Research, No. 25, PP: 49-64[In Persian]. [27] Mayberry, M.A., McGuire, S.T., Omer, T. C. (2015). Smoothness and the Value Relevance of Taxable Income. The Journal of the American Taxation Association, No. 37(2), PP: 141-167. [28] Mehrani, S., sayyedi, J. (2014). Survey Relation between Tax Avoidance and tax difference in listed Companies in Tehran Stock Exchange. Accounting and Auditing Researchs, No. 24, PP:50-75[In Persian]. [29] Minnick, K., Noga, T. (2010). Do Corporate Governance Characteristic Influence Tax Management,Journal of Corporate Finance,No.16.PP:703-718. [30] Neuman, S., Omer, T., Schmidt, A. (2013). Risk and return: does tax risk reduce firms' effective tax rates?. Working Paper, TexasA&M University and North Carolina State University. [31] Plesko, G. A. (2007). Estimates of the magnitude of financial and tax reporting conflicts. working paper, Massachusetts Institute of Technology. [32] Pourheidari, O., Sarvestani, A. (2012). Investigating the Effect of Firm Characteristics, Industry Type and Institutional Ownership on the Difference between Declared and Definite Tax of Firms Listed in Tehran Stock Exchange, Journal of tax research, No. 20, PP: 61-77 [In Persian]. [33] Pourheidari, O., Sarvestani, A. (2013). dentifying and Explaining the Effective Factors on the Tax Management. Journal of Accounting Knowledge, No. 12, PP: 89-110 [In Persian].