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...

We extend research on the determinants of corporate tax avoidance to include the role of Internal Revenue Service (IRS) monitoring. Our evidence from large samples implies that U.S. public firms undertake less aggressive tax positions when tax enforcement is stricter. Reflecting its first-order...

We analyze the importance of Internal Revenue Service (IRS) monitoring to equity pricing in U.S. public firms. Our evidence from large samples implies that equity financing is cheaper when the probability of an IRS audit is higher, enabling investors to learn more about the firm. Reflecting its...