The Role of Audit Firm Expertise and Knowledge Spillover in Mitigating Earnings Management through the Tax Accounts
研究了审计事务所的行业专长和税务专长如何约束企业通过税务账户进行的盈余管理，发现知识溢出有助于非专长事务所降低这种“最后机会”盈余管理。
ABSTRACT Tax-related accounts are complex and often the last accounts finalized in the financial reporting process. Accordingly, these accounts can be used as a “last-chance” earnings management tool (Dhaliwal, Gleason, and Mills 2004). We investigate the extent to which an audit firm's industry expertise constrains earnings management through the tax accounts. We find that national industry audit experts constrain earnings management through the tax accounts. We also find that audit firm tax expertise constrains earnings management through the tax accounts when the audit firm is not considered an industry audit expert. Finally, we find evidence that providing both audit and tax services facilitates a nonexpert firm's ability to constrain earnings management through the tax accounts, which suggests that knowledge spillover plays an important role in reducing “last-chance” earnings management. All findings hold among smaller clients and when the extent of earnings management is below quantitative materiality thresholds. Data Availability: All data are publicly available as noted in the text.