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審計人員之產業專精與客戶租稅規避：中國實證研究
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avoidance, which indicates that industry experts are more likely to use their expertise to
develop tax strategies that benefit clients. Since the expertise developed in the specific
industry can help auditors find more tax avoidance opportunities and develop more efficient
tax avoidance strategies, our second hypothesis predicts:
H2: Ceteris paribus, auditor industry expertise is positively associated with clients’ tax
avoidance.
The audit market in China is different from that of developed countries. On one hand,
competition among auditors is more pronounced in China due to active participation of
small- and medium-sized CPA firms and low concentrations of Big 4 auditors (Wang et al.,
2008). On the other hand, as an emerging-market and transitional country, China’s legal
system is not perfect; legal protection for investors is poor and the litigation risk of auditors
is lower as compared to the U.S. Therefore, auditors are more likely to compromise their
independence for economic incentives in the Chinese setting, due to higher benefits (to gain
and maintain market share) and lower costs (litigation costs associated with independence
impairment). Based on this assumption, we predict that auditors are more likely to use their
industry-specific knowledge to help their clients evade tax in case of poor auditor
independence.
A line of research, starting with De Angelo (1981), suggested that an auditor’s incentive
to compromise independence relates to the economic significance of client fees. Stanley and
Dezoort (2007) provides further support for this argument by demonstrating that the more
economically dependent the auditor is on the client, the more likely the auditor is to succumb
to client pressure, and the audit quality is lower. Besides fee dependence, auditor tenure is
another determinant of auditor independence. Hoyle (1978) finds a negative association
between auditor tenure and audit quality. He argues that, because of economic bonds and
close relationships, auditors are more likely to acquiesce to clients’ wishes in a longer tenure.
Based on these researches, this study uses fee dependence and auditor tenure to proxy
auditor independence and predicts that auditor industry expertise will be more positively
associated with tax avoidance when there is poor auditor independence. This leads to our
third hypothesis:
H3: As fee dependence or auditor tenure increases (which represents poor auditor
independence), clients’ tax avoidance increases with their auditors’ industry
expertise.