Journal of
Accounting and Taxation

  • Abbreviation: J. Account. Taxation
  • Language: English
  • ISSN: 2141-6664
  • DOI: 10.5897/JAT
  • Start Year: 2009
  • Published Articles: 209

Full Length Research Paper

Non-conforming tax aggressiveness and earnings management: Evidence from Greek public companies

Stavroula Kourdoumpalou
  • Stavroula Kourdoumpalou
  • Department of Business Administration, University of Macedonia, Thessaloniki, Greece.
  • Google Scholar
George Drogalas
  • George Drogalas
  • Department of Business Administration, University of Macedonia, Thessaloniki, Greece.
  • Google Scholar

  •  Received: 10 December 2021
  •  Accepted: 27 January 2022
  •  Published: 28 February 2022


The present paper examines the tax and financial reporting behaviour of Greek public companies after the adoption of International Financial Reporting Standards. Corporate tax aggressiveness is measured on the basis of tax audit data whereas the extent of financial earnings manipulation is captured by total and discretionary accruals. The findings suggest that earnings quality has deteriorated as firms engage in non-conforming earnings management by concurrently manipulating both their tax and accounting earnings. The results are robust for the alternative specifications of earnings management. These non-conforming reporting strategies are depicted in a high level of book-tax differences that has been considered a red flag for corporate misreporting. The research focuses on public firms in an emerging market and a code law country. The findings contradict previous studies in code law countries and highlight the need to analyse the different institutional characteristics among jurisdictions when investigating corporate reporting behaviour. Furthermore, the research reveals extensive earnings manipulation in an accounting environment with strict tax and accounting audit enforcement. The constraints imposed by the clientelistic political system in Greece and the lack of a strong accounting and auditing oversight board are considered to limit the enforceability of tax and accounting regulations.


Key words: Earnings management, tax evasion, book-tax conformity, accrual models, International Financial Reporting Standards (IFRS).