| Summary: | 碩士 === 逢甲大學 === 會計學系 === 107 === Previous research has verified that a company’s taxable income contains incremental information content. The issue is whether the volatility of that income conveys any information about future firm risk. Using Taiwan’s listed and over-the-counter companies in 2008–2017 as samples, this study examined the correlation between fluctuations in a company’s taxable income and its future firm risk. The empirical results indicate that the volatility of the former was significantly and positively correlated with the latter (via both the Beta coefficient and standard deviation of operating profits). The implication was that the aforementioned volatility level does convey information on future firm risk. Concurrently, it was found that the correlation coefficient between a company’s taxable and book incomes was significantly and negatively correlated with the standard deviation of its operating profits, meaning the higher the extent of its tax avoidance, the greater its future firm risk. This study further found that for companies in the non-electronics industry, the correlation coefficient between the taxable and book incomes significantly and negatively correlated with the company’s Beta coefficient. However, the correlation was not significant for companies in the electronics industry. This could be because the electronics industry is granted more tax concessions, leading investors to believe that this particular information does not contain information content.
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