Involvement in Offshore Financial Centers and Audit Fees: Evidence from U.S. Multinational Firms
研究发现，在美国的跨国企业中，那些在离岸金融中心设有子公司的企业，其审计费用显著高于没有这类业务的企业，且参与程度越高，审计费用越高，这主要与离岸中心的监管套利和保密政策有关。
This study examines how a U.S. firm’s involvement in offshore financial centers (OFCs), by setting up subsidiaries or affiliates in OFCs, is associated with audit fees. After controlling for tax aggressiveness, firm strategy, international operation, and other firm characteristics, we find that U.S. multinational enterprises (MNEs) with OFC operations pay higher audit fees than U.S. MNEs without OFC operations. In addition, a greater extent of OFC operations is further associated with higher audit fees. This result is robust to using different measures of OFC involvement and controlling for issues of self-selection, endogeneity, and joint determination effect of audit and non-audit fees. We also find that a higher level of OFC operations is associated with higher audit risk, as measured by internal control weaknesses and the probability of financial reporting-related litigation. Further analysis shows that the audit fee increasing effect of OFC involvement is unlikely to be driven by corporate tax planning strategy and tax rate differential between the U.S. and OFCs, but driven by the regulatory arbitrage opportunities and secrecy policies of OFCs. In sum, this paper contributes to the literature on audit fees and OFCs.