This study examines how a strategic tax auditor affects a multinational firm’s transfer pricing in a tax compliance game. Our model uses a divisionalized firm, in both a low-tax and a high-tax country, that decides to implement a transfer-pricing regime with either one or two sets of books....

We examine whether tax audit regimes become more efficient if (i) there are audited financial statements and (ii) tax auditors have access to the internal statutory audit report revealing information about statutory audit adjustments. Our analysis is based on a standard tax compliance game that...

The Internet Appendix includes formal claims and proofs for the alternative sequence section. The original paper `When do firms use one set of books in an international tax compliance game?' is available at the following URL: https://ssrn.com/abstract=3012231