Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments April 30, 2023 erstellt
Description:
We examine whether voluntary, cooperative tax audits are associated with incrementally greater corporate tax compliance and positive spillover to financial reporting quality relative to enforced, adversarial tax audits. Extant literature lacks a direct comparison of these options, which both involve audit certainty. To address the gap, we compile a unique sample of U.S. data and explicitly model the endogeneity of joining a cooperative IRS program. Consistent with expectations, we document incrementally higher effective tax rates (compared to benchmark firms) and lower likelihood of restatement for firms in the cooperative, CAP program than firms in the adversarial, CIC program, controlling for inherent characteristics. Additional stakeholder benefits of cooperative audits include lower tax risk and more effective tax planning. Overall, our research has important implications for allocating tax authority resources to cooperative or adversarial audits, the governance role of tax audits, and externalities that can arise from programs that encourage corporate transparency