The Impact of Incentive and Non-Incentive Tax Policies on Earnings Management

Abstract

This study examines the influence of tax incentives and non-incentive factors on earnings management practices. Independent variables include tax incentives (tax planning, deferred taxes, current taxes, and total percentage of shares distributed) and non-tax incentives (leverage, capital intensity ratio, managerial ownership, and profitability), while earnings management serves as the dependent variable. The research focuses on Tehran Stock Exchange-listed companies from 2011 to 2020, with a purposive sample of 48 companies. Utilizing descriptive statistics and the Generalized Method of Moments (GMM) for analysis, the findings reveal no significant effect of tax planning, leverage, capital intensity ratio, deferred taxes, or managerial ownership on earnings management. Conversely, current taxes, the percentage of shares distributed, and profitability exhibit a positive and significant impact on earnings management.