2026-04-17T14:19:24Zhttps://recercat.cat/oai/request

oai:recercat.cat:2072/4241802024-10-29T15:36:40Zcom_2072_98col_2072_378197

urn:hdl:2072/424180 Incumbent audit firm-provided tax services and the clients with low financial reporting quality Chong, H. Gin Laitinen, Erkki K. Myllymäki, Emma-Riikka Universitat Autònoma de Barcelona. Departament d'Empresa Auditoria Impostos Informació financera This study investigates whether incumbent audit firm-provided tax services enhance or impair the likelihood of acknowledging client companies' low financial reporting quality. In particular, we examine the association between tax-related fees and the likelihood of timely restatements, and internal control weakness disclosures among a sample of US companies that all have misstatements in financial information. The empirical findings indicate that companies paying higher tax-related fees are less likely to disclose SOX 404 internal control weakness disclosures, implying that underlying control problems are unacknowledged when incumbent audit firm provided tax-related fees are higher. However, the findings suggest that just providing both audit and tax-related services does not have an impact on audit quality per se, but rather it is the magnitude of the tax-related fees in particular that counts. We also find some evidence suggesting that companies paying higher tax-related fees have higher likelihood of restatement lags, whereas companies paying smaller tax-related fees to their audit firm restate financial statements in a timelier manner. Overall, the findings suggest that audit scrutiny of client companies with low quality financial reporting is weaker when the magnitude of tax-related fees is higher. 2014 Working paper Departament d'Economia de l'Empresa. Documents de treball ; open access Aquest document està subjecte a una llicència d'ús Creative Commons. Es permet la reproducció total o parcial, la distribució, i la comunicació pública de l'obra, sempre que no sigui amb finalitats comercials, i sempre que es reconegui l'autoria de l'obra original. No es permet la creació d'obres derivades. https://creativecommons.org/licenses/by-nc-nd/3.0/ Universitat Autònoma de Barcelona. Departament d'Economia de l'Empresa