Tax Avoidance and Auditor Quality : Evidence Using Quantile Regression

This is the first paper about the existence of non-linear relations between auditor quality and tax avoidance (TA), using a quantile regression approach. We find that the relation between auditor quality and TA depends on the degree of TA. Specifically, for greater tax aggressive firms, being audited by a BIG4 and audit tenure are both irrelevant; however, in less aggressive firms, both variables affect the TA. These conclusions point out the existence of different firm behavior throughout TA distribution. It is therefore appropriate to use the quantile regression approach rather than the linear regression models used in the prior literature