Corporate Tax Savings When Hiring a Big 4 Auditor: Empirical Evidence for Belgium

19 Pages Posted: 23 Jan 2006

See all articles by Boudewijn Janssen

Boudewijn Janssen

KU Leuven - Department of Economics

Hylke Vandenbussche

Catholic University of Leuven (KUL), CEPR

Karen Crabbe

KU Leuven - Department of Economics

Date Written: March 2005

Abstract

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

Suggested Citation

Janssen, Boudewijn and Vandenbussche, Hylke and Crabbe, Karen, Corporate Tax Savings When Hiring a Big 4 Auditor: Empirical Evidence for Belgium (March 2005). Available at SSRN: https://ssrn.com/abstract=876564 or http://dx.doi.org/10.2139/ssrn.876564

Boudewijn Janssen (Contact Author)

KU Leuven - Department of Economics ( email )

Leuven, B-3000
Belgium

Hylke Vandenbussche

Catholic University of Leuven (KUL), CEPR ( email )

Faculty of Economics
Naamsestraat 69
B-3000 Leuven, 3000
Belgium
+32 16 326 920 (Phone)
+32 16 326 732 (Fax)

HOME PAGE: https://www.sites.google.com/site/vandenbusschehylke/home-1

Karen Crabbe

KU Leuven - Department of Economics ( email )

Leuven, B-3000
Belgium

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