Determinants and Consequences of Auditor Provided Tax Services: A Systematic Review of the International Literature

We review the empirical literature on the determinants and consequences of auditor-provided tax services (APTS) and provide some directions for future research. We first review the evolution of APTS fees disclosures and related regulations in select jurisdictions, followed by a summary of determinants of APTS. We review studies examining firms’ decisions (1) to disclose the APTS information voluntarily; (2) to choose incumbent auditors as the tax service providers; and (3) to retain or dismiss incumbent auditors as the tax service providers. Our review suggests that all these decisions are related to the cost-benefit trade-off. We then review the literature on the consequences of APTS. This strand of the literature in the U.S. supports the knowledge spillover effect, but the findings in the non-U.S. settings are mixed. The market perceptions of APTS in both the U.S. and non-U.S. settings suggest that market participants react to APTS negatively during uncertain periods.