Review Journal

Judul Audit Fees and Book-Tax Differences

Jurnal Journal of American Taxation Association
Download http://web.a.ebscohost.com/ehost/pdfviewer/pdfviewer?
vid=1&sid=04d1c749-6724-4c4a-a6f4
c74803dd17cf%40sessionmgr4006
Volume dan Halaman Volume 34 Issue 1, p.55-86
Tahun 2012
Penulis Hanlon Michelle, Gopal V. Krishan, and Lillian F. Mills
Reviewer David Luntungan
Faculty of Economic and Business, Airlangga University
Tanggal 11 September 2017

Abstract We investigate whether book-tax differences are associated with higher audit fees,
a proxy for auditor risk assessments and auditor effort. Our evidence suggests that
there is a significantly positive relation. Further, this association is larger for firms
that appear to have managed earnings (i.e., have high accruals) relative to those
that are tax avoiders (i.e., have low cash effective tax rates). Our evidence is
consistent with large book-tax differences representing an observable proxy for
earnings management that is associated with auditor decisions. Our study
contributes to capital market research that examines audit fees, as well as other
research that examines the usefulness of book-tax differences for market
participants.

Pendahuluan Latar Belakang Masalah:

This study investigates whether and why book-tax differences explain audit fees, a
proxy for auditor risk assessment and auditor effort, incremental to other variables
known to b e significant determinants. Prior research has examined the association
between book-tax differences and measures of earnings quality and/or tax
avoidance.1 However, there is limited evidence on whether book-tax differences
affect auditors decisions.2 By attesting to the fai representation of financial
information, auditors are an important financial intermediary that helps investors
and creditors use and trust financial information. If book-tax differences help to
explai audit fees, it suggests that such differences create additional audit
complexity or audit risk arising from earnings quality issues or tax
avoidance/complexity. We conduct tests to distinguish between these explanations,
building on Ayers et al. (2009). Overall, our evidence is consistent with book-tax
differences influencing audit fees due to their implications for earnings quality,
rather than audit effort to investigate tax avoidance and its resulting effect on tax
contingency reserves.

Rumusan Masalah:
We find that large book-tax differences are associated with higher audit fees. To
further examine the reason for the robust association between audit fees and book-
tax differences, we conduct two additional tests. First, we identify firms in the
lowest decile of long-run cash effective tax rates and label these observations as tax
avoiders, consistent with Ayers et al. (2009) and Blaylock et al. (2010). We find the
association between audit fees and book-tax differences is significantly less
positive for tax avoiders than other firms, suggesting that tax avoidance and
complexity alone are not the reasons for the additional audit effort. We then label
1
 firms in the highest decile of total accruals as low earnings quality, again consistent
with Ayers et al. (2009). We find the association between audit fees and book-tax
differences is significantly more positive for high-accrual firms. Together, these
two tests suggest that earnings quality is the more important contributing factor.

Tujuan penulisan penelitian:

examine the portion of our sample that appears to be tax planners, and we control
for as many factors as we can that proxy for firm complexity in an effort to identify
the source of the additional effort. The evidence, after an extensive array of
sensitivity tests, is most consistent with low earnings quality concerns being the
main driver of our results.

Tinjauan Pustaka Landasan Teoritik:

Audit Risk Influences Audit Fees : Auditing standards indicate that auditors
should respond to engagement risks by altering the nature, timing, and extent of
audit procedures; e.g., SAS No. 47 (American Institute of Certified Public
Accountants [AICPA] 1983) and SAS No. 82 (AICPA 1997).6 Prior research is
generally consistent with auditors responding to risks, although it is somewhat
mixed. For example, using a small sample and private data, Bedard and Johnstone
(2004) report that auditors plan for increased effort and billing rates for clients with
earnings manipulation risk (measured using engagement partner assessments of
existing clients). Using data from one audit firm over two years, Johnstone and
Bedard (2001) provide evidence that risk has little effect on planned personnel
hours, but does affect actual fees. They find that the audit firm responds to fraud
and error risk factors by assigning more high-risk specialist personnel, assigning
more industry expert personnel, applying more intensive testing, and/or performing
additional review. In addition, Bell et al. (2001) find that high business risk
increases audit hours, implying that audit firms can assess firm-level differences in
business risk and obtain compensation through billing additional hours.

Book-Tax Differences Proxy for Audit Risk - Heltzer and Shelton (2011)
conduct a large-scale survey of auditors and find that, on average, auditors perceive
all types of large book-tax differences to be related to an increase in audit risk.
Further, they find that auditors perceive large positive book-tax differences to have
a greater effect on audit risk relative to large negative book-tax differences.
Another key finding is that roughly one-third of auditors state that they use book-
tax differences to assess audit risk. In addition, suspected earnings management
reflected in book-tax differences is noted as the top reason why auditors use book-
tax differences to assess audit risk. Heltzer and Shelton (2011) do not examine
the relation between book-tax differences and audit fees. We view our archival-
based study and their survey-based study as complementary.

Book-Tax Differences - Our main independent variable of interest is book-tax

differences: the difference between what the firm reports as financial accounting
income and what the firm reports as taxable income. Empirically, temporary
differences are generally estimated as the deferred tax expense for the firm grossed
up by the statutory tax rate. This estimate will capture temporary differences, but
also changes in the valuation allowance, and may capture changes in the
contingency reserve if recorded in deferred tax accounts.

2
 Landasan Empirik:
Tax Avoidance versus Financial Accounting Motives - The positive association
between audit fees and book-tax differences is consistent with two possible areas of
concern for auditors. First is the quality of pretax accruals. The second concern is
with tax avoidance that may lead to a more complex tax provision or may indicate
that the company is a cheater (Desai and Dharmapala 2006).

Hipotesis H: There is a positive association between large book-tax differences and audit
fees, ceteris paribus.
Hypothesis Test: The Association between Audit Fees and Book-Tax Differences
Effect of Absolute Book-Tax Differences on Audit Fees

Model Empiris Prediction that book-tax differences are associated with audit fees, we include our
measure of book-tax differences in the following model based on Simunic (1980)
and Larcker and Richardson (2004):

Variabel Ln(AUDITFEE)t = log of audit fee (obtained directly from Standard and Poors,
as disclosed by the firms in proxy statements);
Ln(ABSBTD)t = log of the absolute value of the spread between pretax book
income and taxable income (BTD = data #170 - ((data #16 - data #50)/0.35 -data
#52). Alternatively, Ln(ABSDEXP), the log of the absolute value of the firms
deferred tax expense for the year (data #50), or Ln(ABSNONTEMPBTD), the log
of the absolute value of (BTD - deferred tax expense/0.35);
Ln(ABSACC)t = log of the absolute value of total accruals measured as the
difference between earnings and cash flow from operations (data #18 - data #308);
BIG5t = an indicator variable set equal to 1 for client-observations audited by a
Big 5 auditor (or Big 4 auditor, after the demise of Arthur Andersen), and 0
otherwise (item #149);
Ln(ASSET)t = log of total assets (item #6);
Ln(BUSSEG)t = log of the number of business segments (Compustat SEGNUM)
owned by the client;
FGNt = ratio of foreign pretax income (item #273) to total pretax income (item
#170);
INVt = inventory (item #3) to average total assets;
RECt = receivables (item #2) to average total assets;
DEBTt = sum of short-term debt and long-term debt (item #34item #9) to average
total assets;
INCOMEt = the ratio of operating income after depreciation (item #178) to
average total assets;
LOSSt = an indicator variable set equal to 1 if income before extraordinary items
and discontinued operations (item #18) is negative in the current or two previous
years, and 0 otherwise;
AUDOPINt = an indicator variable set equal to 1 if the firm receives a modified
audit opinion (item #149), and 0 otherwise. A modified opinion is defined as
anything other than a standard unqualified audit opinion coded as 1 by Compustat;
INDt = industry indicator variables based on the two-digit SIC codes; and
YEAR = year of the observation included when we estimate the regression over the
pooled sample.
3
Variabel Kontrol 1. The size of the auditee,
2. The complexity of the auditees operations,
3. Auditing problems associated with certain financial statement components,
especially inventories and receivables,
4. The industry of the auditee, and
5. Whether the auditee is a publicly or closely held company.

Sampel Start with all observations available on the 2007 Compustat database with non-
missing asset data for the years 20002006 (n 62,979). We lose 29,228
observations because they lack audit fee data. Lose another 8,109 observations due
to missing segment data. Exclude firms in the financial services or utilities industry
because of the regulatory rules surrounding those firms for both tax and financial
reporting and a data limitationdeferred tax data are not available on Compustat
for financial services firms. Exclude firms that are foreign-owned. Finally, we lose
4,569 observations because of missing data to compute book-tax differences or
other variables in our audit fee regression. This leaves us with a final sample of
17,613 firm-years.

Hasil dan Pembahasan Table 5 presents the estimation of Equation (1) after we partition the sample based
on the level of the book-tax differences. The coefficient on Ln(ABSBTD) for the
top quintile (observations with the largest positive book-tax differences [i.e.,
taxable income , book income]) in Table 5 is 0.139, indicating that a 10 percent
increase in the underlying book-tax differences represented by a mean
Ln(ABSBTD) of 5.426 increases audit fees by about 1.39 percent. Evaluating this
regression at the mean of all variables (ignoring year and industry) within the top
quintile of book-tax differences suggests that this 10 percent increase explains an
approximate $29,000 increase in fees.21 In contrast, a 10 percent increase in
accruals is associated with only an $8,000 increase in fees. The coefficient in
Group 5 (coefficient 0.139) is larger than any other group (e.g., the Group 1
coefficient is the smallest at 0.033), suggesting that book income in excess of
taxable income represents the greater audit risk.
Table 6 reports our results. The results are consistent with those reported earlier
in Table 5 for the quintiles of firmsaudit fees increase as positive book-tax
differences grow more positive, and audit fees increase as negative book-tax
differences become more negative. Thus, the larger in absolute value the book-tax
differences, the higher the audit fees. The negative interaction term on
Ln(ABSBTD) _ NBTD (pooled coefficient_0.029, p-value0.0001) combined
with the positive total coefficient on Ln(ABSBTD) (sum coefficient 0.079 _
0.029 0.05) indicates that negative book-tax differences increase audit fees, but
not as much as do positive book-tax differences. In the annual regressions, the
interaction of Ln(ABSBTD) _ NBTD is significantly negative in three of seven
years. Overall, our signed results for book-tax differences are consistent with audit
literature (St. Pierre and Anderson 1984; Heninger 2001; Abbott et al. 2006) that
argues that the risk of litigation is greater when earnings are overstated than when
understated.
Tables 5 and 6 suggest that the association between audit fees and book-tax
differences varies in magnitude depending on the sign and relative size of the
difference.

4
Kesimpulan This study investigates whether book-tax differences are associated with higher
audit fees. We measure book-tax differences as total book-tax differences and
either temporary or non-temporary book-tax differences alone. We also consider
both absolute and signed book-tax differences. The data are consistent with larger
book-tax differences in absolute value being associated with higher audit fees. One
interpretation of this evidence is that large book-tax differences reflect information
that represents a higher risk of earnings management that increases auditors efforts
and time spent on the audit. Further, we find that audit fees are higher when book-
tax differences are large and positive, but less so when book-tax differences are
large and negative. Because the positive differences could include both potential
earnings management and potential tax avoidance, we attempt to distinguish the
two sources via tests that separate the sample into (1) long-run tax avoiders versus
other firms, or (2) firms whose high accruals could indicate potential earnings
management versus other firms. These additional tests reveal that the positive
association between audit fees and book-tax differences is smaller for firms that
display the most long-run tax avoidance. In contrast, the positive association
between audit fees and book-tax differences is larger for firms that have higher
total accruals. Thus, we interpret this pair of results as suggesting that concerns
about earnings managementunrelated to tax avoidanceare more responsible for
the fee and effort increase. This study contributes to the literature that investigates
the information reflected in book-tax differences and the relevance of book-tax
differences on the audit process. We acknowledge that the economic magnitude of
the relation is somewhat small, and that we cannot completely separate audit effort
spent on validating the amount of deferred tax accounts from the effort spent on
investigating concerns about earnings quality in other nontax accounts (e.g., bad
debt reserve). However, our results are robust to extensive sensitivity tests,
including controls for firm complexity, attempts to control for measurement error
in the calculation of book-tax differences, and a control for the level of the firms
accruals.
Daftar Pustaka Empirik:
Abbott, L. J., S. Parker, and G. F. Peters. 2006. Earnings management, litigation
risk, and asymmetric audit fee responses. Auditing: A Journal of Practice &
Theory 25 (1): 8598.
American Institute of Certified Public Accountants (AICPA). 1983. Audit Risk and
Materiality in Conducting and Audit. Statement on Auditing Standards: No.
47. New York, NY: AICPA.
American Institute of Certified Public Accountants (AICPA). 1997. Consideration
of Fraud in a Financial Statement Audit. Statement on Auditing Standards
No. 82. New York, NY: AICPA.
American Institute of Certified Public Accountants (AICPA). 2003. Consideration
of Fraud in a Financial Statement Audit. Statement on Auditing Standards
No. 99. New York, NY: AICPA.
Ashbaugh, H., R. LaFond, and B. Mayhew. 2003. Do nonaudit services
compromise auditor independence?Further evidence. The Accounting
Review 78 (3): 611639.
Ayers, B. C., J. X. Jiang, and S. K. Laplante. 2009. Taxable income as a
performance measure: The effects of tax planning and earnings quality.
Contemporary Accounting Research 26 (1): 1554.
Ayers, B. C., S. K. Laplante, and S. T. McGuire. 2010. Credit ratings and taxes:
The effect of book-tax differences on ratings changes. Contemporary
Accounting Research 27 (2): 359402.

5
Badertscher, B., J. D. Phillips, M. Pincus, and S. O. Rego. 2009. Earnings
management strategies and the trade-off between tax benefits and detection
risk: To conform or not to conform? The Accounting Review 84 (1): 8397.
Barron, O., J. Pratt, and J. D. Stice. 2001. Misstatement direction, litigation risk,
and planned audit investment. Journal of Accounting Research 39 (3): 449
462.
Bebchuk, L., A. Cohen, and A. Ferrell. 2009. What matters in corporate
governance? Review of Financial Studies 22 (2): 783827.
Bedard, J. C. 1989. An archival survey of audit program planning. Auditing: A
Journal of Practice & Theory 8 (Fall): 5771.
Bedard, J., and K. Johnstone. 2004. Earnings manipulation risk, corporate
governance risk, and auditors planning and pricing decisions. The
Accounting Review 79 (April): 277304.
Bell, T., W. Landsman, and D. Shackelford. 2001. Auditors perceived business risk
and audit fees: Analysis and evidence. Journal of Accounting Research 39
(June): 3543.
Blaylock, B., T. Shevlin, and R. Wilson. 2010. Tax Avoidance, Large Positive Book-
Tax Differences and Earnings Persistence. Working paper, University of
Iowa and University of Washington.
Blouin, J., C. Gleason, L. Mills, and S. Sikes. 2007. What can we learn about
uncertain tax benefits from FIN 48? National Tax Journal 60: 52135.
Chatterjee, S., and B. Price. 1977. Regression Analysis by Example. New York, NY:
Wiley.
Choi, J. H., J. B. Kim, X. Liu, and D. Simunic. 2008. Audit pricing, legal liability
regimes, and Big 4 premiums: Theory and cross-country evidence.
Contemporary Accounting Research 25 (2): 5599.
Crabtree, A., and J. Maher. 2009. The influence of differences in taxable income
and book income on the bond credit market. The Journal of the American
Taxation Association 31 (1): 7599.
Davis, L. R., D. N. Ricchuite, and G. Trompeter. 1993. Audit effort, audit fees, and
the provision of nonaudit services to audit clients. The Accounting Review
68 (January): 135150.
Desai, M., and D. Dharmapala. 2006. Corporate tax avoidance and high-powered
incentives. Journal of Financial Economics 79 (January): 145179.
Desai, M., I. Dyck, and L. Zingales. 2007. Theft and taxes. Journal of Financial
Economics 84: 591623.
Dhaliwal, D., C. Gleason, and L. Mills. 2004. Last chance earnings management:
Using the tax expense to achieve earnings targets. Contemporary
Accounting Research 21 (Summer): 431459.
Donohoe, M., and R. Knechel. 2010. Muddying the Water: The Impact of
Corporate Tax Avoidance on Auditor Remuneration. Working paper,
University of Florida.
Dyreng, S., M. Hanlon, and E. Maydew. 2008. Long-run corporate tax avoidance.
The Accounting Review 83 (January): 6182.
Ettredge, M., L. Sun, P. Lee, and A. Anandarajan. 2008. Is earnings fraud
associated with high deferred tax and/or book minus tax levels? Auditing: A
Journal of Practice & Theory 27 (1): 133.
Financial Accounting Standards Board (FASB). 2006. Accounting for Uncertainty
in Income Taxes. Financial Interpretation No. 48. Norwalk, CT: FASB.
Francis, J., K. Reichelt, and D. Wang. 2005. The pricing of national and city-
specific reputations for industry expertise in the U.S. audit market. The
Accounting Review 80 (1): 113136.

6
Frank, M. M., and S. Rego. 2006. Do managers use the valuation allowance
account to manage earnings around certain earnings targets? The Journal of
the American Taxation Association 28 (1): 4366.
Frankel, R. M., M. F. Johnson, and K. K. Nelson. 2002. The relation between
auditors fees for nonaudit services and earnings management. The
Accounting Review 77 (Supplement): 71105.
Gleason, C., and L. Mills. 2002. Materiality and contingent tax liability reporting.
The Accounting Review 77 (2): 317342.
Gleason, C., M. Pincus, and S. O. Rego. 2009. Material Weaknesses in Tax-
Related Internal Controls and Earnings Management. Working paper, The
University of Iowa.
Guenther, D. 2011. What Do We Learn from Large Book-Tax Differences?
Working paper, University of Oregon.
Gul, F. A., C. J. P. Chen, and J. S. L. Tsui. 2003. Discretionary accounting
accruals, managers incentives, and audit fees. Contemporary Accounting
Research 20 (Fall): 441464.
Gupta, S., R. Laux, and D. Lynch. 2011. Do Firms Use Tax Cushion Reversals to
Meet Earnings Targets? Evidence from the Pre- and Post-FIN 48 Periods.
Working paper, Michigan State University.
Hackenbrack, K., N. Jenkins, and M. Pevzner. 2011. Relevant but Undisclosed
Information in Negotiated
Audit Fees: Evidence from Stock Price Crashes. Working paper. Available on
SSRN at http://papers.ssrn.com/sol3/papers.cfm?abstract_id1668983
Hanlon, M. 2003. What can we infer about a firms taxable income from its
financial statements? National Tax Journal 56 (December): 831863.
Hanlon, M. 2005. The persistence and pricing of earnings, accruals and cash flows
when firms have large book-tax differences. The Accounting Review 80
(1): 137166.
Hanlon, M., and S. Heitzman. 2010. A review of tax research. Journal of
Accounting and Economics 50 (2/3): 127178.
Hanlon, M., S. Laplante, and T. Shevlin. 2005. Evidence on the possible
information loss of conforming
book income and taxable income. Journal of Law and Economics 48 (October):
407442.
Hanlon, M., and J. Slemrod. 2009. What does tax aggressiveness signal? Evidence
from stock price reactions to news about tax shelter involvement. Journal of
Public Economics 93 (January): 126141.
Heltzer, W., and S. Shelton. 2011. Book-Tax Differences and Audit Risk: Evidence
from the United States. Working paper, DePaul University.
Heninger, W. G. 2001. The association between auditor litigation and abnormal
accruals. The Accounting Review 76 (1): 111126.
Hribar, P., T. Kravet, and R. Wilson. 2010. A New Measure of Accounting Quality.
Working paper, University of Iowa.
Johnstone, K., and J. Bedard. 2001. Engagement planning, bid pricing, and client
response in the market for initial attest engagements. The Accounting
Review 76 (2): 199220.
Jones, K., G. Krishnan, and K. Melendrez. 2008. Do models of discretionary
accruals detect actual cases of fraudulent and restated earnings? An
empirical evaluation. Contemporary Accounting Research 25 (Summer):
499531.
Jones, A., and T. Noga. 2009. Book-Tax Differences as an Indicator of Financial
Distress. Working paper, Bentley University.

7
Joos, P., J. Pratt, and D. Young. 2000. Book-Tax Differences and the Value
Relevance of Earnings.Working paper, Massachusetts Institute of
Technology, Indiana University, and INSEAD.
Krishnan, G., and G. Visvanathan. 2008. Do auditors price audit committees
expertise? The case of accounting vs. non-accounting financial experts.
Journal of Accounting, Auditing and Finance 24 (1): 115144.
Larcker, D., and S. Richardson. 2004. Fees paid to audit firms, accrual choices and
corporate governance. Journal of Accounting Research 42 (June): 625658.
Lev, B., and D. Nissim. 2004. Taxable income, future earnings, and equity values.
The Accounting Review 79 (4): 10391074.
Lisowsky, P. 2010. Seeking shelter: Empirically modeling tax shelters using
financial statement information. The Accounting Review 85: 16931720.
Maletta, M., and T. Kida. 1993. The effect of risk factors on auditors configural
information processing. The Accounting Review 68 (3): 681691.
Manry, D., T. J. Mock, and J. L. Turner. 2007. The association of pre-audit
engagement risk with discretionary accruals. Journal of Accounting,
Auditing, and Finance 22 (4): 623644.
Manzon, G., Jr., and G. Plesko. 2002. The relation between financial and tax
reporting measures of income. Tax Law Review 55 (2): 175214.
Maydew, E., and D. Shackelford. 2007. The changing role of auditors in corporate
tax planning. In Taxing Corporate Income in the 21st Century, edited by
Auerbach, A., J. R. Hines, Jr., and J. Slemrod.
Messier, W., and D. Plumlee. 1987. The effects of anticipation and frequency of
errors on auditors selection of substantive procedures. Accounting and
Business Research 17 (Autumn): 349358.
Mills, L. 1998. Book-tax differences and internal revenue service adjustments.
Journal of Accounting Research 36 (2): 343356.
Mills, L., M. Erickson, and E. Maydew. 1998. Investments in tax planning. The
Journal of the American Taxation Association 20: 121.
Mills, L., and K. Newberry. 2001. The influence of tax and non-tax costs on book-
tax reporting differences: Public and private firms. The Journal of the
American Taxation Association 23 (1): 119.
Mills, L., and K. Newberry. 2005. Firms off-balance sheet and hybrid debt-
financing: Evidence from their book-tax reporting differences. Journal of
Accounting Research 43 (2): 251282.
Mills, L., and R. Sansing. 2000. Strategic tax and financial reporting decisions:
Theory and evidence. Contemporary Accounting Research 17 (1): 85106.
Mills, Lillian F., and G A. Plesko. 2003. Bridging the reporting gap: A proposal for
more informative reconciling of book and tax income. National Tax Journal
56 (4): 865893.
Mock, T. J., and J. L. Turner. 2001. An Archival Study of Audit Fraud Risk
Assessments Made Under SAS 82. Auditing Standards Board of the AICPA
Research Monograph. New York, NY: AICPA.
Mock, T. J., and A. Wright. 1993. An exploratory study of auditors evidential
planning judgments.Auditing: A Journal of Practice & Theory 12 (2): 39
61.
OKeefe, T. B., D. A. Simunic, and M. T. Stein. 1994. The production of audit
services: Evidence from a major public accounting firm. Journal of
Accounting Research 32 (Autumn): 241261.
Omer, T., J. Bedard, and D. Falsetta. 2006. Auditor-provided tax services: The
effects of a changing regulatory environment. The Accounting Review 81
(October): 10941117.

8
Phillips, J., M. Pincus, and S. Rego. 2003. Earnings management: New evidence
based on the deferred tax expense. The Accounting Review 178 (2): 491
522.
Picconi, M., and K. Reynolds. 2010. Audit Fee Theory and Estimation: A
Consideration of the Logarithmic Audit Fee Model. Working paper, Indiana
University.
Plesko, G. A. 2002. Reconciling corporation book and tax net income, tax years
19961998. SOI Bulletin (Spring): 116.
Raedy, J., D. Shackelford, and J. Seidman. 2011. Is There Information Content in
the Tax Footnote? Working paper, The University of North Carolina.
Raghunandan, K., and D. Rama. 2006. SOX Section 404 material weakness
disclosures and audit fees.
Auditing: A Journal of Practice & Theory 25 (1): 99114.
Securities and Exchange Commission (SEC). 2002. Waste Management Founder,
Five Other Former Top Officers Sued for Massive Fraud.SEC Release
200244.Availabl eat: http://www.sec.gov/news/headlines/
wastemgmt6.htm
Seetharaman, A., F. A. Gul, and S. G. Lynn. 2002. Litigation risk and audit fees:
Evidence from UK firms cross-listed on US markets. Journal of Accounting
and Economics 33 (1): 91115.
Seidman, J. 2010. Interpreting Fluctuations in the Book-Tax Income Gap as Tax
Sheltering: Alternative Explanations. Working paper, The University of
Texas.
Simunic, D. 1980. The pricing of audit services: Theory and evidence. Journal of
Accounting Research 18 (1): 161190.
Skinner, D., and R. Sloan. 2002. Earnings surprises, growth expectations, and stock
returns: Dont let an earnings torpedo sink your portfolio. Review of
Accounting Studies 7 (2): 289312.
Slemrod, J., and M. Blumenthal. 1996. The income tax compliance cost of big
business. Public Finance Review 24 (4): 411428.
St. Pierre, K., and J. Anderson. 1984. An analysis of the factors associated with
lawsuits against public accountants. The Accounting Review 59 (2): 242
263.
U.S. House of Representatives. 2002. The Sarbanes-Oxley Act of 2002. Public Law
107-204 [H. R. 3763].Washington, D.C.: Government Printing Office.
Weber, D. 2010. Book-tax differences, analysts forecast errors, and stock returns.
Contemporary Accounting Research 26: 11751206.
Whisenant, S., S. Sankaraguruswamy, and K. Raghunandan. 2003. Evidence on the
joint determination of audit and non-audit fees. Journal of Accounting
Research 41 (4): 721744.
Wilson, R. 2009. An examination of corporate tax shelter participants. The
Accounting Review 84 (3): 9691000. 86 Hanlon, Krishnan, and Mills