Corporate Tax Savings When Hiring a Big 4 Auditor: Empirical Evidence for Belgium
19 Pages Posted: 23 Jan 2006
Date Written: March 2005
In this paper we show that hiring a Big 4 auditor results in substantial corporate income tax savings, compared to hiring a non-Big 4 auditor. Our results are obtained from an empirical model that controls for other factors that may affect companies' income tax burdens. We use a population of larger Belgian firms between 1993 and 2002. The findings suggest that Big 4 audited firms provide (explicitly or implicitly) additional tax expertise which is transferred to their clients and lowers their effective tax rates compared to non-Big 4 audited firms.
Keywords: Belgian firms, Big 4 auditor, Effective tax rates, Financial statements
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