Abstract

This study evaluates the value of mandatory financial audits by introducing a novel measure of audit impact—the difference in Financial Statement Divergence (FSD) scores, based on Benford’s Law, between unaudited quarterly and audited annual financial reports. Using data from firms listed on the Taiwan Stock Exchange and Taipei Exchange, we find that partner-level, rather than firm-level, audit attributes are significantly associated with the magnitude of audit impact. We also document a positiv...

Abstract

Using U.S. merger data from 2010 to 2021, this study examines the relationship between acquirers’ pre-merger ESG performance and their post-merger tax avoidance, as well as whether ownership structure characteristics moderate this relationship. The empirical findings support the shareholder value maximization view. Acquirers’ overall ESG, environmental, and social scores in the year prior to acquisition are significantly negatively associated with post-merger effective tax rates, suggesting that...

Abstract

This study investigates the impact of the Controlled Foreign Corporation (CFC) rules on stock returns, foreign investment decisions, and profit reallocation. The empirical results indicate that firms with lower tendencies to repatriate foreign earnings and greater tax benefits exhibit more negative market reactions on event dates related to the implementation of the CFC rules. Furthermore, the study finds that firms with larger tax benefits tend to reduce their investments and profits in control...

Abstract

This study analyzes how corporate governance shapes shareholders’ investment decisions through firms’ choices of accounting conservatism. Firms are classified into two types according to their tolerance for conservatism: those with passive corporate governance and those with active corporate governance. Within a signaling framework, accounting conservatism affects investors’ beliefs and, in turn, their investment levels. The model characterizes the conditions under which separating equilibrium, ...