Information Content of Income, Tax Avoidance and Taxable Income Management

Managers’ prediction of users’ decisions is economically valuable. Managers do manage income either to distort information or to defer and report the information related to future incomes. This investigation aims at examining the effects of taxable income management on future tax avoidance consequences as well as the information content of firms. Panel data models, multivariate regression model and Eviews econometric software Ver. 6 among 147 Tehran Stock Exchange-enlisted firms between 2002 and 2011 were used to test research hypotheses. Findings show that firms with managed taxable income present more desirable consequences of future tax avoidance activities and also the taxable income management decreases the information content of this kind of income.