Using proprietary data obtained from a local tax office in China, we examine the determinants of corporate tax audits and the consequences of those audits. We find that the tax authority is more likely to select a firm for an audit when the firm has a lower effective tax rate, a higher book-tax...

In China, submitting a claim for R&D tax deductions increases the likelihood that a firm will be scrutinized by the tax authorities. We argue that tax aggressive firms are keen to avoid the oversight of the tax authorities and so they are less likely to submit claims for R&D tax deductions...

Although forms of address are widely used in textual and other types of disclosure, empirical evidence of their effects is rare. China provides a unique setting in which to test the economic consequences of the forms of address used in audit reports. From 2003 to 2011, about 60% of auditors...

Previous research on whether the market responds to auditors' opinions has provided mixed results. We revisit this issue in China, where the stock market is dominated by individual investors who are more likely to neglect value-relevant information. In addition, China permits modified audit...

This paper examines whether the scale advantage of auditing firms can be used as an alternative indicator of audit quality when the evaluation of audit quality is costly. The adoption of asset impairment recognition in China has brought about a considerable impact on financial reporting of...

Analyzing hand-collected data on the corporate subsidiary locations of all publicly listed firms in China, we find that “hometown firms,” firms headquartered in the hometown of the key political leaders of the province, set up more subsidiaries in their home provinces. This effect is...

This paper examines whether the scale advantage of auditing firms can be used as an alternative indicator of audit quality when the evaluation of audit quality is costly. The adoption of asset impairment recognition in China has brought about a considerable impact on financial reporting of...

Although forms of address are widely used in textual and other types of disclosure, empirical evidence of their effects is rare. China provides a unique setting in which to test the economic consequences of the forms of address used in audit reports. From 2003 to 2011, about 60% of auditors...

We explore the relation between government integrity and firms' investment efficiency in the context of China's deepening reforms and its strengthening the social credit system. We find that government integrity is positively associated with the investment efficiency of listed companies in...

This study investigates changes in audit strategy in China following the introduction of risk-based auditing standards rather than an internal control-based audit mode. Specifically, we examine whether auditors are implementing the risk-based audit mode to evaluate corporate governance before...