Purpose – The purpose of this paper is to determine the association between auditor-provided tax services (APTS) and long-term corporate tax rates. Design/methodology/approach – The paper uses empirical data and multivariate regression models to explore the relationship between a firm’s use of APTS and their long-term effective tax rate. Findings – An economically and statistically significant long-term negative relationship was found between firm levels of APTS and taxes paid. Further, a portion of this benefit is lost for some firms when returning to their auditor for tax services even after a short break. Originality/value – This paper contributes to the debate regarding the value of APTS by providing evidence of the apparent long-term negative consequences to firms who reduce their reliance on APTS, perhaps even through the engagement of separate accounting firms for their audit and tax functions, although these consequences may be mitigated upon return with a significant increase in APTS. However, this is the first study, to our knowledge, to explore, in a long-term setting, the consequences of a firm’s return to their auditors for a non-audit service previously reduced or terminated. Additionally, further incremental contributions are made to other studies that look at APTS and tax avoidance by studying the long-term relationship which allows firms to consider the cumulative cost/benefit relationship between independence and knowledge spillover.

SYNOPSIS Restatement disclosures have evolved into two basic categories: reissuances (Big “R”) and revisions (little “r”). A reissuance restatement requires an 8-K filing, whereas a revision restatement can be disclosed in less transparent ways. The high-transparency of a reissuance restatement disclosure (8-K) results in a greater likelihood of negative effects on companies, executives, and auditors (e.g., Plumlee and Yohn 2008; Burks 2010). Determining whether an 8-K filing is required involves judgment regarding materiality of the restatement, thus creating ambiguity as to the correct disclosure method. Such judgment also introduces the potential to opportunistically choose the method of disclosure. We study the restatement disclosure choices of companies to examine whether executive pay structure is associated with disclosure transparency. Using a sample of 1,178 restatements from the years 2004 through 2013, our results show that as the equity proportion of executive pay increases, the likelihood of a high-transparency disclosure decreases. However, as the difference in pay structure between the CEO and CFO increases, the likelihood of a high-transparency disclosure increases. Overall, our results suggest that executive pay structure influences disclosure choice and that pay structure differences between the CEO and CFO may mitigate such influence. Data Availability: All data are available from public sources identified in the paper.

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