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  -