Does professional tax preparation matter? Empirical evidence from Germany

Tax certified individual auditors and effective tax rates

“…Even though StB shows no correlation with tax rates in the descriptives and no association with the effective tax rate ETR in the analyses, the empirical results suggest that having an individual auditor that is also a certified tax consultant is associated with a higher current effective tax rate by about 4.8% points and a higher cash effective tax rate by about 5.5% points. These results are in contrast with prior studies that find tax consultants reduce tax payers' tax burden (see Blaufus et al 2014;Kittl 2015;McGuire et al 2012) but suggest that interactions with effective tax rates differ as soon as the tax consultants under investigation are auditors.…”

“…Given by assumption that auditors with tax certification may be more familiar with the tax code than auditors that are no tax consultants, tax certified individual auditors may be, in this context, better able to judge the risk of aggressive reporting being detected by tax authorities. Individual auditors that are also tax consultants may, therefore, restrict the clients' level of reported effective tax rates to maximize clients' after-tax income given the risk taking and potential penalties upon detection (Kittl 2015;Klepper et al 1991;Klepper and Nagin 1989).…”

“…Auditors' tax certification may, on the one hand, enable them to reduce their clients' tax burden by making them aware of advantageous features of the tax code allowed in conjunction with their financial reporting expertise (Maydew and Shackelford 2007). On the other hand, certified tax consultants may be more aware of reporting behavior that could trigger an inspection by the tax authorities, leading to a lower level of aggressive tax reporting (Kittl 2015;Klepper et al 1991;Klepper and Nagin 1989). In addition to the ambiguity of the expected association of auditors' qualification to be a chartered tax consultant and effective tax rates, there is also the uncertainty of reverse causality.…”

“…Finally, my study expands literature on the influence of tax consultants on tax payers' tax burden. So far, prior research examines the effect of pure tax advisors on individual tax payers' non-business income (e.g., Blaufus et al 2014;Kittl 2015). I extend this stream of research by investigating whether auditors who are primarily operating as auditors but hold the professional qualification of a tax consultant are associated with publicly disclosed corporate tax burdens.…”

Impact of Participation in Young Smart Farmer Program on Smallholder Farmers' Income: A Propensity Score Matching Analysis

“…Upon estimation of the propensity scores, the actual matching may be consistent with numerous algorithms such as nearest neighbor matching, caliper matching, radius matching, and kernel matching [25] . Hav-ing estimated the propensity scores, the actual matching can follow various algorithms [25][26][27][28][29] such as nearest neighbor matching, caliper matching, radius matching, and kernel matching. The matching algorithm is a compromise choice between bias and variance and is crucial for small samples because the distinct algorithms produce the same result in an asymptotic way.…”