Corporate tax savings when hiring a Big 4 auditor: Empirical evidence for Belgium

In this paper we show that hiring a Big 4 auditor results in substantial corporate income tax savings, compared to hiring a non-Big 4 auditor. Our results are obtained from an empirical model that controls for other factors that may affect companies' income tax burdens. We use a population of larger Belgian firms between 1993 and 2002. The findings suggest that Big 4 audited firms provide (explicitly or implicitly) additional tax expertise which is transferred to their clients and lowers their effective tax rates compared to non-Big 4 audited firms.