Collusion or supervision? Between auditor and audit firm – tax planning’s perspective
ISSN: 0114-0582
Article publication date: 16 October 2024
Issue publication date: 19 November 2024
Abstract
Purpose
This study aims to investigate the impact of auditor industry specialization (AIS) on clients’ tax planning at the audit firm level and individual auditor level, respectively.
Design/methodology/approach
The study’s sample consists of 44,637 firm-year observations of Chinese firms listed on the Shenzhen and Shanghai Stock Exchanges during the period from 2002–2020. The data are collected from the Taiwan Economic Journal. Panel regression is used to test hypotheses. Additionally, a two-stage least squares model is used to address concerns about possible endogeneity.
Findings
The relationship between tax planning and AIS is significantly positive at the audit firm level, while it is significantly negative at the individual auditor level.
Originality/value
The authors use manually collected data to investigate the distinct impacts of two AIS metrics on tax planning: the number of clients and the scale of clients.
Keywords
Acknowledgements
The authors extend their sincere gratitude to the anonymous reviewers for the constructive feedback, which has enhanced the rigor of this article. Additionally, they acknowledge the financial support provided by the Natural Science Foundation of Fujian Province, China (No. 2022J011132). The authors would like to express their deepest appreciation to Patrick Hung, former President of KPMG (Taiwan), and Clark Chen, former President of Deloitte (Taiwan) for their invaluable professional guidance and insights, which have greatly contributed to the seamless integration of theoretical and practical aspects in this study.
Citation
Hung, W.-J., Shu, P.-G., Ruan, Y.-Y. and Wang, Y. (2024), "Collusion or supervision? Between auditor and audit firm – tax planning’s perspective", Pacific Accounting Review, Vol. 36 No. 5, pp. 509-526. https://doi.org/10.1108/PAR-12-2023-0180
Publisher
:Emerald Publishing Limited
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