Did the PCAOB's restrictions on auditors' tax services improve audit quality?

Research output: Contribution to journalArticle

16 Citations (Scopus)

Abstract

In 2005–2006, the PCAOB imposed restrictions on auditors' tax services in order to strengthen auditor independence and improve audit quality. The restrictions resulted in a significant drop in auditor-provided tax services (APTS). To test the impact on audit quality, I partition the sample into a treatment group (companies whose APTS purchases dropped significantly when the restrictions were introduced) and a control group (companies whose APTS purchases were relatively unaffected) and I measure audit quality using the incidence of accounting misstatements, tax-related misstatements, and auditors' going-concern opinions. Using a difference-in-differences design, I find no change in audit quality for the treatment group relative to the control group after the restrictions are imposed.
Original languageEnglish
Pages (from-to)1493-1512
Number of pages19
JournalAccounting Review
Volume91
Issue number5
DOIs
Publication statusPublished - 1 Sep 2016

Cite this

Did the PCAOB's restrictions on auditors' tax services improve audit quality? / Lennox, Clive S.

In: Accounting Review, Vol. 91, No. 5, 01.09.2016, p. 1493-1512.

Research output: Contribution to journalArticle

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