Research On The Impact Of Auditor Size On Corporate Tax Aggressiveness

The promulgation and implementation of China's new enterprise accounting standards,while achieving convergence with international accounting standards,also bring more discretion to enterprises.However,there are many differences between our country's corporate accounting standards and tax laws,especially in terms of income definition.This makes it difficult to see through enterprises' tax avoidance activities as enterprises have a larger manipulation space,which leads to the company's increasingly serious tax aggressiveness.Since tax avoidance can directly increase the company's cash flow,companies have a strong tendency to engage in tax avoidance activities for self-interested motives.Therefore,corporate tax aggressiveness is becoming a common phenomenon,leading to a reduction in government revenues,as well as problems such as information opacity and tax risks.Independent auditing is regard as an important mechanism to improve the quality of enterprise information and reduce information asymmetry.Auditor size will affect the quality of auditing,which accordingly may affect corporates tax aggressiveness activities associated with the financial statement items.Based on principal-agent theory,reputation theory,deep pocket theory and audit supply theory,this paper selects Shanghai and Shenzhen A-share listed companies from 2008 to 2017 as an initial sample to study the relationship between auditor size and corporate tax aggressiveness.The results show that: First,the audit of the top ten domestic audit firms can effectively restrain corporate tax aggressiveness.Second,the differences of the institutional environment have a regulatory effect on auditor size and corporate tax aggressiveness.The specific performance is as follows: the improvement of the legal level and the weakening of government intervention can strengthen the suppression effect of the audit of top ten domestic audit firms on corporate tax aggressiveness.Third,a possible mechanism for audit firm's impact on corporate tax avoidance is that the former require the audited entity to make a financial restatement when necessary,thereby affecting the management's future tax decisions,and thus exerting a supervisory role.According to the research conclusions,this paper proposes countermeasures to promote the audit firm's bigger and stronger system,to strengthen the level of legal governance and capacity,and to develop market-oriented economic policies that are dominated by the market and supplemented by the government,so as to provide decision-making for reference.