Determinants of Audit/Tax Separation Decisions
AbstractThis study examines companies that separated or integrated the tax and audit functions subsequent to the passage of the Sarbanes-Oxley Act (SARBOX). While the provision of tax services is not currently prohibited by SARBOX, some companies have separated these two functions. An examination of the relationship between tax function separation (integration) and proxies for audit quality, tax advocacy and audit fee is performed for a matched sample of companies that made the decision to separate or integrate during the period following the passage of SARBOX. In addition, we survey CFOs of both types of companies to determine the motivations behind the separation/integration decision. Our results indicate separation firm CFOs perceive benefits associated with auditor independence as their main reason for separating, while integration firm CFOs perceive cost savings and knowledge spillover as benefits of integration. The matched-pair analysis suggests that both cost-savings and tax-savings are present in the year the tax and audit function is integrated, a benefit not enjoyed by their separation firm peers.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Emerald Group Publishing in its journal American Journal of Business.
Volume (Year): 24 (2009)
Issue (Month): 1 ()
Contact details of provider:
Web page: http://www.emeraldinsight.com
Postal: Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK
Find related papers by JEL classification:
- R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
- Z0 - Other Special Topics - - General
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Gopal V. Krishnan & Wei Yu, 2011. "Further evidence on knowledge spillover and the joint determination of audit and non-audit fees," Managerial Auditing Journal, Emerald Group Publishing, vol. 26(3), pages 230-247, March.
- Mikko Zerni, 2012. "Do client firms manage the perception of auditor independence?: Evidence from the Swedish non-audit service market," Managerial Auditing Journal, Emerald Group Publishing, vol. 27(9), pages 821-845.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Chris Harris).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.