Publication Type
Journal Article
Version
acceptedVersion
Publication Date
11-2016
Abstract
Using an international sample of firms from 31 countries, we study the relation between auditor quality and corporate tax aggressiveness. Employing an indicator variable for tax aggressiveness when the firm's corporate tax avoidance measure is within the top quintile of each country-industry combination, we find strong evidence that auditor quality is negatively associated with the likelihood of tax aggressiveness, even after controlling for other institutional determinants such as home-country tax system characteristics. We also find that the negative relation between auditor quality and the likelihood of tax aggressiveness is more pronounced in countries where investor protection is stronger, auditor litigation risk is higher, the audit environment is better, and capital market pressure is higher.
Keywords
auditor quality, corporate tax aggressiveness, investor protection, litigation risk, audit environment, capital market pressure
Discipline
Accounting | Corporate Finance | International Business
Research Areas
Corporate Governance, Auditing and Risk Management
Publication
Auditing: A Journal of Practice and Theory
Volume
35
Issue
4
First Page
105
Last Page
135
ISSN
0278-0380
Identifier
10.2308/ajpt-51417
Publisher
American Accounting Association
Citation
KANAGARETNAM, Kiridaran; LEE, Jimmy; LIM, Chee Yeow; and LOBO, Gerald J..
Relation between auditor quality and corporate tax aggressiveness: Implications of cross-country institutional differences. (2016). Auditing: A Journal of Practice and Theory. 35, (4), 105-135.
Available at: https://ink.library.smu.edu.sg/soa_research/1533
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.2308/ajpt-51417