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Auditor Identity Disclosure and Corporate Tax Avoidance

Fri, March 19, 8:30 to 10:00am, Virtual, TBA

Abstract

This paper investigates the impact of the required audit partners’ identity disclosure on their clients’ corporate tax avoidance. In January 2017, the PCAOB enacted Rule 3211, which mandates all U.S.-registered public accounting firms to disclose the identity information such as personal name of the engagement partner for each audit report issued. We expect that the increased pressure caused by identity disclosure motivates auditors to be more conservative when dealing with tax avoidance issues. Our analysis shows a significant increase in effective tax rates during the post-Rule 3211 period among companies that had previously engaged in more tax avoidance. Furthermore, we find that companies not purchasing auditor-provided tax services generally exhibit less corporate tax avoidance after the enactment of Rule 3211.

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