Journal of Accounting Review  2024/01
Vol.78   123-164

Accounting Comparability and Relative Tax Avoidance: The Roles of Information Environment and Business Strategy

Yi-Hsing Liao/Department of Accounting, Chung Yuan Christian University
Teng-Sheng Sang/Department of Accounting, Chung Yuan Christian University
Yu-Shan Chang/Department of Accounting, Tamkang University


How do information sources affect corporate tax avoidance behavior relative to industry peers? In this study, we examine this important issue using the emerging market setting of Taiwan, where poor information disclosures and abusive related party transactions negatively affect the information environment. We have found that a firm’s tax avoidance rank among peers is significantly influenced by accounting comparability, which is consistent with the notion that accounting comparability can help to reduce the costs of information acquisition and the processing of peer firms. The comparability effect is stronger when firms have a richer peer information environment, but not when firms share directors with other firms. Further analyses indicate that the comparability effect is more pronounced for firms sharing common directors with strategically similar firms. Overall, these results are in line with the view that accounting comparability matters to managers in the assessment of peers’ tax arrangements, but only to the extent that there is a lack of private information sharing or a strategic similarity between the focal firm and its interlocking firms. 


Relative tax avoidanceAccounting comparabilityDirector interlocksBusiness strategies

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