An Empirical Study on Factors That Affect Firms’ Purchase of Auditor－provided Tax Services
Asian Tax Journal Vol. 15 No. 3 (2014), pp. 47-72
Abstract
When a firm’s auditor provides tax services to the firm, there can be negative effect ofdecreasing audit quality and accounting information quality due to the impairment of auditorindependence, as well as positive effect of increasing audit quality, accounting information qualityand tax service quality due to the knowledge spillover between audit service and tax services. Andtherefore, it is expected that a firm’s decision on purchase of auditor－provided tax services bemade by the factors causing the positive and negative effects. What is mentioned above implies that the positive and negative effects of auditor－provided taxservices can be looked over more generally, by performing an empirical study on the factors thataffect firms’ purchase of auditor－provided tax services. But there have been only a few empiricalstudies on this issue. Based on these points, this study examines for the Korean listed companiesthe factors that influence firms to purchase auditor－provided tax services. Test results say that firms with strong governance or high tax and operational complexity aremore likely to purchase auditor－provided tax services, and that firms are more likely to purchaseauditor－provided tax services when their auditor’s independence level or knowledge spillovercapacity is high. These results support that a firm’s decision on purchase of auditor－provided taxservices is made by judging the positive and negative effects of auditor－provided tax services onthe whole.
Keywords
- Auditor－Provided Tax Services
- Auditor Independence
- Knowledge Spillover
- Corporate Governance
- Tax and Operating Complexity
Related Articles
The Relation between Accrual－based Earnings Management & Real Earnings Management, and Auditor－provided Tax Services
20(4) 65-93
The Effects of Auditor－provided Tax Serviceson Firm’s Activity of Real Earnings Management
20(3) 137-164
A Study on the Fulfillment of Company's Obligation on Preparing Financial Statements
11(4) 123-151
The Effect of Timing of Auditor Change on Audit Quality
7(3) 29-51
A Study on the Relation between Auditors' Independence and Non－Audit Services－Considering the Endogeneity among Audit Fees, Non－Audit Fees and Discretionary Accruals and the Corporate Governance－
6(4) 99-127