Determinants and consequences of auditor‐provided tax services: A systematic review of the international literature

Abstract

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 summarise two theoretical but competing perspectives on APTS provision, namely, the knowledge spillover effect and the impaired independence effect. We then review the evolution of APTS‐related disclosures and regulations in selected jurisdictions. Our review of the determinants of APTS suggests that such 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 United States supports the knowledge spillover effect, but the findings in non‐US settings are mixed. The market perceptions of APTS in both the US and non‐US settings suggest that market participants react to APTS negatively during uncertain periods, whereas nonarchival studies suggest that the perceptions of APTS vary between stakeholder groups and with the types of APTS provided.