TY - JOUR AU - Maydew, Edward L AU - Shackelford, Douglas A TI - The Changing Role of Auditors in Corporate Tax Planning JF - National Bureau of Economic Research Working Paper Series VL - No. 11504 PY - 2005 Y2 - August 2005 DO - 10.3386/w11504 UR - http://www.nber.org/papers/w11504 L1 - http://www.nber.org/papers/w11504.pdf N1 - Author contact info: Edward Maydew Kenan-Flager Business School University of North Carolina-Chapel Hill Campus Box 3490, McColl Building Chapel Hill, NC 27599-3490 E-Mail: edward_maydew@unc.edu Douglas Shackelford University of North Carolina at Chapel Hill Kenan-Flagler Business School Campus Box 3490, McColl Building Chapel Hill, NC 27599-3490 Tel: 919/962-3197 Fax: 919/962-4727 E-Mail: doug_shack@unc.edu AB - This paper examines changes in the role that auditors play in corporate tax planning following recent events, including the well-known accounting scandals, passage of the Sarbanes-Oxley Act, and regulatory actions by the SEC and PCAOB. On the whole, these events have increased the sensitivity to and scrutiny of auditor independence. We examine the effects of these events on the market for tax planning, in particular the longstanding link between audit and tax services. While the effects are recent, they are already being seen in the data. Specifically, there has already been a dramatic shift in the market for tax planning away from obtaining tax planning services from one's auditor. We estimate that the ratio of tax fees to audit fees paid to the auditors of firms in the S&P 500 decline from approximately one in 2001 to one-fourth in 2004. At the same time, we find no evidence of a general decline in spending for tax services. In sum, the evidence indicates a decoupling of the longstanding link between audit and tax services, such that firms are shifting their purchase of tax services away from their auditor and towards other providers. ER -