The Impact of the Auditor and Tax Advice on the Effective Tax Rate

15 Pages Posted: 16 Jan 2011

See all articles by Karen Crabbe

Karen Crabbe

KU Leuven - Department of Economics

Date Written: September 1, 2010


This paper studies the effect of tax advice expenses and the auditor on the effective tax rate for large Belgian firms. Moreover, we analyze how this relation changes when the corporate governance code was implemented in 2003. Following the Sarbanes Oxley Act of 2002, Belgium approved a similar but less strict code. This study uses Belgian firm‐level data between 1999 and 2007. The results indicate that spending money on tax advice does not reduce the ETR, while hiring a big4 auditor does. Although it seems that hiring a big4 auditor in the years after the corporate governance code went into practice leads to a smaller reduction in ETR than before. On average, a big4 auditor can lower the ETR of a Belgian firm by 1 percentage point. This indicates that information transfer between the auditor and the tax department is less common after the implementation of the corporate governance code.

Keywords: auditor, tax advice, effective tax rate, corporate governance

JEL Classification: M41, M42, H25

Suggested Citation

Crabbe, Karen, The Impact of the Auditor and Tax Advice on the Effective Tax Rate (September 1, 2010). Available at SSRN: or

Karen Crabbe (Contact Author)

KU Leuven - Department of Economics ( email )

Leuven, B-3000

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics