Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments November 16, 2022 erstellt
Description:
Using a sample of cross-country observations, we examine the impact of the implementation of country-by-country reporting (CbCr) by the European Union in 2016 on audit fees. We posit that on one hand increased tax transparency increases both firms’ demand for audit effort to better support the firms’ tax position and auditors’ engagement risk, hence increasing audit fees. On the other hand, increased tax transparency reduces firms’ aggressive tax avoidance activities and incentivises firms to better document and support their tax position, hence reducing audit fees. Using a difference-in-differences approach we find an increase in audit fees following the implementation of CbCr reporting. This increase in audit fees is larger for firms subject to greater oversight. Further analysis suggests that firms improved their reporting quality following the implementation of CbCr and financially stronger firms experience a larger increase in audit fees. Taken together these results suggest that the increase in audit fees is primarily driven by increased demand for audit services following the implementation of CbCr