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

Clive S. Lennox

Research output: Contribution to journalArticlepeer-review

65 Citations (SciVal)


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
Issue number5
Early online date31 Dec 2015
Publication statusPublished - 30 Sept 2016


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