The Effect of Tax Authority Monitoring and Enforcement on Financial Reporting Quality
研究了税务机关的执法力度与公司财务报告质量之间的关系，发现更高的税收执法水平与更好的财务报告质量正相关，且在其他监督机制较弱时这种关系更强。
ABSTRACT: This paper examines the relation between tax enforcement and financial reporting quality. The government, due to its tax claim on firm profits, is de facto the largest minority shareholder in almost all corporations. Therefore, the government, like other shareholders, has an interest in the accurate reporting of (taxable) income and preventing insiders from siphoning corporate funds to obtain private benefits. We hypothesize and find evidence that higher tax enforcement by the tax authority has a positive association with financial reporting quality. Further, we find that this association is generally stronger when other monitoring mechanisms are weaker. Our evidence is consistent with the predictions from the Desai, Dyck, and Zingales (2007) theory that the tax authority provides a monitoring mechanism of corporate insiders. Our paper also adds to the literature on the determinants of financial reporting quality and how the relation between accounting standards and reporting outcomes depends on country-level institutions. JEL Classifications: G3, H25, H26, K34, M40.