Journal article
The effect of tax-motivated income shifting on information asymmetry
Review of accounting studies, Vol.23(3), pp.958-1004
09/01/2018
DOI: 10.1007/s11142-018-9439-1
Abstract
We examine whether tax-motivated income shifting by U.S. multinational corporations affects information asymmetry. Using a new firm-year measure of income shifting and a two-stage least squares approach, we find income shifting is positively associated with four measures of information asymmetry. Cross-sectional tests reveal that this effect is more pronounced for firms with large differences between foreign and domestic earnings growth. Using SFAS 131 to improve identification and establish evidence consistent with a causal relation between income shifting and information asymmetry, we demonstrate that the adverse impact of income shifting on information asymmetry is concentrated in firms that discontinue geographic earnings disclosures. Overall, our study provides evidence that significant consequences of information asymmetry are associated with tax-motivated income shifting.
Details
- Title: Subtitle
- The effect of tax-motivated income shifting on information asymmetry
- Creators
- Ciao-Wei Chen - University of Illinois Urbana-ChampaignBradford F. Hepfer - Mitchell InstitutePhillip J. Quinn - University of WashingtonRyan J. Wilson - University of Oregon
- Resource Type
- Journal article
- Publication Details
- Review of accounting studies, Vol.23(3), pp.958-1004
- Publisher
- Springer Nature
- DOI
- 10.1007/s11142-018-9439-1
- ISSN
- 1380-6653
- eISSN
- 1573-7136
- Number of pages
- 47
- Grant note
- Gies College of Business Foster School of Business Lundquist College of Business Mays Business School
- Language
- English
- Date published
- 09/01/2018
- Academic Unit
- Accounting
- Record Identifier
- 9984380521202771
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