Document Type : Research Paper

Authors

• Abouzar Parsaiee
• Saeed Moradpour
• Mohammad Hossein Ranjbar
• Morteza Bavaghar

Department of Accounting and Finance, BA. C., Islamic Azad University, Bandar Abbas, Iran

Abstract

This paper aims to present a model of individual and macro-level factors affecting tax accounting quality. In terms of research directions, this paper is a combination of applied and developmental studies. In this research, 19 experts were used as the study sample. In order to conduct this research, first, 59 indicators were identified in the form of two components, individual and macro-level factors, using the content analysis approach. In the second part, with a survey of experts and the fuzzy screening method, important and effective indicators were determined. At this stage, 38 indicators were selected. The results of the analyses carried out in the structural-interpretive modeling method indicated that the indicators of individual and macro-level factors were placed at five and one levels, respectively. Also, the results obtained from the fuzzy network analysis method indicate that, from the point of view of experts, the most important indicators are the "financial manager gender" and the "corruption level" index in the case of macro-level factors.

Introduction

In recent years, increased regulatory focus on financial reporting related to income tax has drawn significant attention to the quality of tax accounting information disclosed in companies’ annual reports. This issue has become particularly pronounced in Iran due to economic sanctions, which have compelled the country to reduce its budget dependence on oil revenues and enhance tax revenue collection through improved transparency and tax justice. Consequently, the quality of tax accounting has emerged as a critical and timely concern in Iran, with various groups and organizations striving to find effective solutions to improve the quality and transparency of tax accounting information.

Literature Review

A comprehensive review of domestic and international literature on taxation and the quality of tax accounting identified a total of 59 potential individual-level and macro-level factors influencing the quality of tax accounting in Iranian companies. These factors were extracted through content analysis of prior studies, highlighting a wide range of indicators that could potentially affect tax accounting quality. However, the applicability and significance of these indicators in the specific context of Iran remain subject to expert evaluation.

Methodology

This study aimed to model and rank the individual and macro-level factors affecting tax accounting quality in Iran. Initially, 59 indicators were identified from the literature review and content analysis. Subsequently, a fuzzy screening technique was employed, along with expert opinions, to refine and select the most relevant 38 indicators. The interrelationships and hierarchical levels of these indicators were then explored using the Interpretive Structural Modeling (ISM) technique. Network analysis was also utilized to determine the relative importance and influence of each indicator.

Results

The findings revealed that all 19 macro-level indicators operate at the same hierarchical level, directly influencing each other. In contrast, individual-level indicators were classified into five hierarchical levels:

Level 1: Tax accounting understanding, loss aversion threshold motivation, earnings decline avoidance motivation, and tax specialists.
Level 2: Tax information asymmetry, earnings management forecasting, financial manager competence, and managerial conservatism.
Level 3: Management judgment, managerial optimism, managerial analytical power, financial confidentiality, and managerial reputation.
Level 4: Behavioral cultural intelligence, and ethical sensitivity.
Level 5: Gender of the financial manager, gender of the CEO, financial manager experience, and managerial capability.

Indicators at Level 5, considered foundational, exert the greatest influence on indicators in higher levels, while those at Level 1 are most influenced by other factors. The study identified “gender of the financial manager” as the most influential individual factor for enhancing tax accounting quality, consistent with previous research emphasizing the positive role of female managers in financial reporting transparency and earnings quality. Among macro-level indicators, the societal corruption level was identified as the most critical factor affecting tax accounting quality, followed by tax culture and modern technologies such as big data analytics.

Discussion

The hierarchical model indicates that managing foundational individual factors such as managerial gender, experience, and capability can significantly enhance tax accounting quality. The strong influence of macro-level factors, particularly corruption, suggests that broader socio-economic reforms are essential to improve tax accounting standards. Furthermore, the differing importance assigned by experts to various factors reflects the contextual specificity of Iran’s economic and regulatory environment. The findings align with prior international studies but also highlight unique local considerations that shape tax accounting practices.

Conclusion

This study offers a structured framework to understand and prioritize the individual and macro-level determinants of tax accounting quality in Iran. Policymakers and practitioners are advised to focus on managing both micro-level managerial attributes and macro-level environmental factors to promote transparency and accuracy in tax accounting. Future research could extend this model by examining the interplay between tax accounting quality and variables such as board characteristics, ownership structure, financial information quality, and institutional investors. Limitations include the reliance on expert opinion and questionnaire methods, which should be considered when applying the findings.

Keywords

• Individual factors
• Macro-level factors
• Tax
• Tax accounting quality
• Tax reporting

Main Subjects

• Accounting and various aspects of finance