Measuring Tax Authority Monitoring

What is it about?

This study develops a measure capturing realized firm-level tax authority monitoring from publicly available financial statement data.

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Why is it important?

Existing proxies typically either measure the probability of monitoring at a more aggregate level, capture a narrow aspect of monitoring, or rely on confidential data not broadly available. Given the important role tax authority monitoring can play in a number of firm outcomes, it is important for researchers to have a measure that captures broad realizations of monitoring at the firm-year level.