Auditor's Characteristics and Tax Avoidance
Asian Tax Journal Vol. 13 No. 3 (2012), pp. 191-219
Abstract
Tax Avoidance decreases accounting information quality(Balakrishnan et al., 2011；Kang, 2012). Accordingly as well as earning managements, tax avoidance will increase audit risk, too. If audit quality is high, tax avoidance might decrease. Auditor's characteristics are primary factors of audit quality. So we can expect that tax avoidance is different depending on auditor's characteristics. This study examines the relation between auditor's characteristics and tax avoidance using firms listed in Korea Stock Exchange during 2002 to 2010. We use a corporate tax avoidance measure developed in Desai and Dharmapala(2006) and focus on four auditor's characteristics；auditor size,audit fees(or unexpected audit fees), whether auditor changes and whether auditor provides tax return service together. The findings are as follows：First, unexpected audit fees and auditor changes are statistically positively related to tax avoidance. Second, whether auditor provides tax return service together are not statistically related to tax avoidance indivisually. But tax return service negatively affects the association between unexpected audit fees and tax avoidance, auditor changes and tax avoidance. Lastly, auditor size is not statistically related to tax avoidance. we expect this study help investors to understand which of auditor's characteristics affect on tax avoidance and to infer tax avoidance second hand using auditor's characteristcs.
Keywords
- auditor's characteristics
- tax avoidance
Related Articles
Tax Specialist Auditors and Tax Avoidance: Small and Medium－Sized Accounting Firms
26(1) 9-36
The Effect of Accounting Firm Mergers on Corporate Tax Avoidance of Auditees
21(6) 189-209
Overconfident CEOs and Corporate Tax Avoidance
20(6) 35-61
Audit Characteristics and Asset Impairment Recognition
20(6) 115-135
Mandatory Auditor Rotation Firm and Tax Avoidance in accordance with Auditor Provided Tax Services
20(1) 95-116