Does Auditor Quality Constrain Corporate Tax Avoidance? Some International Evidence

• In Event: Continental Breakfast - Research and Education Forum
  In Roundtable Session: Table 7: Effects of Audit Quality

Abstract

Using an international sample of firms from 32 countries, we study the relation between auditor quality and corporate tax avoidance. We find strong evidence that auditor quality is associated with lower corporate tax avoidance, even after controlling for other institutional determinants such as home-country tax system characteristics. We also find that the role of high quality auditors in constraining tax avoidance is more pronounced in countries where book-tax conformity is lower, equity-based incentives are stronger, and the information environment is poorer.

Authors

• Kiridaran Kanagaretnam, York University

• Kiat Bee Jimmy Lee, Singapore Management University

• Chee Yeow Lim, Singapore Management University

• Gerald Lobo, University of Houston