Top

Review of Accounting Studies

Published in:

27-04-2022

Tax haven incorporation and financial reporting transparency

Author: Christina M. Lewellen

Published in: Review of Accounting Studies | Issue 3/2023

Activate our intelligent search to find suitable subject content or patents.

search-config

AI-assisted search

Off

Abstract

A widespread perception exists that tax havens facilitate corporate opacity. This study provides new evidence on the association between tax havens and the transparency of firm financial reporting using a unique group of firms whose parent companies are incorporated in tax havens but whose headquarters or primary operations—that is, their base—are in nonhaven countries. While most research suggests a negative association between tax havens and transparency, I examine whether this association depends on the firm’s corporate governance environment as well as its capital market incentives. I find that the negative association is limited to firms subject to weak governance in the base country. In contrast, I find, among firms in stronger governance environments, a positive association between tax haven incorporation and transparency, which is most concentrated among firms with greater capital market incentives. My findings suggest that future researchers should use caution when assuming an unambiguous negative association between tax havens and corporate transparency. The study also provides unique evidence that tax planning can motivate higher transparency in certain settings.

previous article Bank financial reporting opacity and regulatory intervention

next article When do firms use one set of books in an international tax compliance game?

Dont have a licence yet? Then find out more about our products and how to get one now:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

über 102.000 Bücher
über 537 Zeitschriften

aus folgenden Fachgebieten:

Automobil + Motoren
Bauwesen + Immobilien
Business IT + Informatik
Elektrotechnik + Elektronik
Energie + Nachhaltigkeit
Finance + Banking
Management + Führung
Marketing + Vertrieb
Maschinenbau + Werkstoffe
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

inform now

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

über 67.000 Bücher
über 340 Zeitschriften

aus folgenden Fachgebieten:

Bauwesen + Immobilien
Business IT + Informatik
Finance + Banking
Management + Führung
Marketing + Vertrieb
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

inform now

Available only for authorised users

I assume that the base country is exogenous, following prior research (e.g., El Ghoul et al. 2013).

Financial information is “readily understandable” if it conveys enough information to help users in making economic decisions but not so much detail as to cloud the underlying economics (Barth and Schipper 2008).

The direct benefit to shareholders of investing in a tax haven firm is the low or 0 % withholding tax rates, in contrast to withholding tax rates of other countries, which can range to up to 40% for nonresident investors (Dharmapala 2008). Anecdotal evidence also suggests that attracting foreign capital is an additional motivation for tax haven parent incorporation. Both Ingersoll-Rand and Cooper Industries indicated in their registration statements that reincorporating in a tax haven would help them to attract a wider range of investors. See Appendix 1 for excerpts from these firms’ disclosures.

Although criminal cases against corporate officers are often tried at the federal level (i.e., Securities and Exchange Commission vs. Company X), the laws governing internal affairs of the corporation and civil cases against officers are generally determined by the firm’s legal domicile, which is the tax haven country in the case of tax haven firms. For firms incorporated outside the United States, shareholder suits that are brought in the U.S. district court will still apply the governing rules of the foreign jurisdiction of incorporation (Kun 2004; Moon 2018).

While the weaker shareholder protections resulting from incorporating in a tax haven could provide opportunities for misconduct and low transparency for any firm with a presence in a tax haven, this effect should be most salient for firms with parents incorporated in tax havens, because the corporate law applies to the entire multinational corporation rather than only to the activities of one subsidiary.

Tax haven incorporation could result in lower transparency, and the firm could still receive a clean audit as long as managers do not materially misstate earnings. The auditor’s purpose is to provide reasonable assurance that the financial statements are prepared in accordance with GAAP and are not materially misstated. An auditor does not opine on whether managers are investing prudently, advancing the interests of shareholders, or making vague disclosures, especially if disclosures are voluntary.

Atwood and Lewellen (2019) examine the complementarity between tax avoidance and manager diversion in weak governance settings, using tax haven parents as a unique setting that has the opacity necessary to observe this complementarity. They do not examine whether firms with tax haven parents are more or less transparent than other firms, or whether the association between tax haven parents and transparency varies with the strength of governance.

Sixty-eight percent of firms with tax haven parents in my sample have their primary listing in their base country. When the firm is both based and listed in a strong governance country, shareholders and regulators can bring legal actions against managers in that country in cases of criminal misconduct. For foreign issuers based in weak governance countries, a strong reporting environment in the listing country may not deter manager misconduct (e.g., Chen et al. 2016).

The sample period ends in 2013 because the data from Atwood and Lewellen (2019) used for this study is hand-collected through the year 2013. In an untabulated test, I obtain data through 2016 (prior to the vast changes of the Tax Cuts and Jobs Act of 2017) for my sample and find that inferences from the hypothesis tests are unchanged in the period of 2014–2016.

A tax haven firm’s base country is the nonhaven country first identified using this algorithm: (1) the country where the firm was incorporated prior to incorporating in the tax haven country, (2) the country where the firm is headquartered, (3) the country where the firm generates more than 50% of its revenue or has more than 50% of its assets, or (4) the country of the firm’s primary operating subsidiary (Allen and Morse 2013). Atwood and Lewellen (2019) determine this information by examining reports from Mergent Online, Mergent Webreports Worldscope, and SEC EDGAR.

For the nonhaven firms from Compustat North America, I classify firm-years with nonmissing nonzero foreign tax (TXFO) or foreign pre-tax income (PIFO) as multinational. For nonhaven firms from Compustat Global, I retrieved geographic segment information from Thomson Eikon, and I classify firm-years reporting more than one geographic segment or reporting revenue outside of the base country as multinational.

In addition to the consolidated parent firm (e.g., Microsoft Corporation), Compustat sometimes also includes significant subsidiaries as a separate observation, even if they are consolidated into the operations of the parent firm. See Table 1 for more details on the process for identifying subsidiaries.

I include financial firms (SIC 6,000–6,999) in my sample; however, many accounting studies drop these firms. My sample includes only 73 tax haven firm-years in this SIC group. All results are robust to their exclusion.

The largest number of firms originate from China. A primary reason that a large number of Chinese firms have top entities incorporated in tax havens is that Chinese firms have had especially strong tax incentives to incorporate their parent entity in a tax haven. Prior to 2008, China had preferential tax rules, including tax holidays and preferential tax rates, for companies incorporated outside of China (Li 2006). Moreover, recent research has found that Chinese-based foreign firms have continued to benefit from tax haven incorporation even after a 2008 tax law change ended the preferential tax rules for foreign entities because they responded to this tax change by shifting more income out of China (An and Tan 2014).

Barth and Schipper (2008) describe three types of empirical proxies to measure transparency, including market-, analyst-, and accounting-based measures. The earnings–return relation is a market-based measure. I tabulate results using analyst and accounting-based measures in additional analyses.

Potential measures of information asymmetry more generally, such as liquidity (e.g., bid-ask spread or the number of zero return days) also reflect other factors, such as the number of shares, demand for the firm’s stock, and transaction costs, and do not directly measure transparency related to financial reporting, which is my construct of interest. I tabulate additional financial reporting transparency measures in additional analyses.

I estimate the model by accounting standard, industry (Fama French 17 classification), and year and require at least 10 observations per estimation. I provide the calculation details for TRANS in Appendix 3. Following research using valuation data in international settings (e.g., Francis et al. 2005b; Doidge et al. 2004), I use returns for the primary listing to estimate TRANS.

All variables are defined in detail in Appendix Table 9. All continuous variables are winsorized at 1 and 99% unless otherwise noted in Appendix Table 9.

I use data from Bureau Van Dijk, which are not historical, to calculate HAVENSUB, NCO, and NSUB. I retrieved these data in January 2018, and these variables are constant throughout the sample for each firm.

I focus on governance as the country-level variable of interest (rather than financial reporting rules or information dissemination) because this factor determines whether, on average, investors can discipline managers. Even if financial reporting requirements should lead to higher transparency, managers of firms based in weak governance countries may be able to avoid following these requirements, due to the lack of potential discipline (e.g., Chen et al. 2016).

The Investor Protection score from Atwood and Lewellen (2019) is preferred to other potential measures of country-level governance (e.g., the Anti-Director Index from La Porta et al. 1998, common law indicator variable), because it captures four underlying facets of governance and therefore more comprehensively measures governance. In addition, Investor Protection can be measured for all countries in my sample, and the period of measurement overlaps well with the sample period, in contrast to the La Porta et al. (1998) data, which ends in 1995. Following Atwood and Lewellen (2019), I use the average of the four components rather than a factor score, because the raw values (ranging from 0 to 10) and the mean split of the simple average are more readily interpretable, compared to a factor score. All inferences regarding the hypotheses are robust to designating Strong based on a common law indicator variable or the mean of the factor score of these four components.

To provide additional evidence that cross-country differences do not drive my results, I also estimate Eq. (1) for a sample of firms based and primarily listed in the United States using U.S. GAAP. I find a positive and significant coefficient on TRANS in this subsample (p < 0.01), which is consistent with the primary results.

Mean TRANS in strong governance countries is 0.454 (untabulated).

To provide evidence on whether tax haven firms engage in more accounting fraud, I retrieve data from Audit Analytics, which is available from 1995 for SEC registrants. I find only two tax haven firms in my sample with evidence of accounting fraud (Tyco International Ltd. and Marvel Technology Group Ltd.). The scarcity of fraud cases suggests that they are isolated incidences rather than being indicative of greater fraud on average in tax haven firms, at least among firms based in strong governance countries such as the United States.

Sixty-two (29) percent of all (tax haven) firm-years are classified as Top Exchg equal to 1.

See Table 5 for details on ownership concentration calculation. Forty-three percent of firms based in weak governance countries have high ownership concentration.

I add a variable for time trend (Timetrend), since disclosures may increase over time. I exclude the fixed effects due to the small sample size.

The exogenous tax incentive variable is calculated as the statutory corporate tax rate in the base country less the mean statutory tax rate of the sample countries in year t. I follow the guidance from Lennox et al. (2012) in implementing the Heckman (1979) procedure. I exclude the exogenous variable from the second-stage model. To qualify as an exclusionary variable, the researcher must assume that this variable should have no direct association with the Y variable (i.e., TRANS). An untabulated regression of TRANS on the exclusionary variable and industry, year, and base country fixed effects confirms no significant association between this variable and TRANS.

I require that firms are both based and listed in IFRS-adopting countries to provide assurance that the firm will be subject to these reporting requirements. I limit the sample to countries with strong governance to hold the country-level governance environment constant, since Daske et al. (2008) find capital market benefits of IFRS adoption only in countries with institutional environments that are conducive to transparency.

The links to the full document filings referenced in this Appendix are included at the end of the Appendix.

Abdi, F., and A. Ranaldo. (2017). A simple estimation of bid-ask spreads from daily close, high, and low prices. The Review of Financial Studies 30 (12): 4,437–4,480.CrossRef

Allen, E.J., and S.C. Morse. (2013). Tax-haven incorporation for U.S.-headquartered firms: No exodus yet. National Tax Journal 66 (2): 395–420,279.CrossRef

An, Z., and C. Tan. 2014. Taxation and income shifting: Empirical evidence from a quasi-experiment in China. Economic Systems 38 (4): 588–596.CrossRef

Atwood, T.J., and C. Lewellen. (2019). The complementarity between tax avoidance and manager diversion: Evidence from tax haven firms. Contemporary Accounting Research 36 (1): 259–294.CrossRef

Badertscher, B.A., J.D. Phillips, M. Pincus, and S.O. Rego. (2009). Earnings management strategies and the trade-off between tax benefits and detection risk: To conform or not to conform? The Accounting Review 84 (1): 63–97.

Balakrishnan, K., J.L. Blouin, and W.R. Guay. (2019). Tax aggressiveness and corporate transparency. The Accounting Review 94 (1): 45–69.

Ball, R., S.P. Kothari, and A. Robin. (2000). The effect of international institutional factors on properties of accounting earnings. Journal of Accounting and Economics 29 (1): 1–51.

Balsam, S. (1998). Discretionary accounting choices and CEO compensation. Contemporary Accounting Research 15 (3): 229–252.CrossRef

Barth, M.E., and K. Schipper. (2008). Financial reporting transparency. Journal of Accounting, Auditing & Finance 23 (2): 173–190.CrossRef

Barth, M.E., W.R. Landsman, and M.H. Lang. (2008). International accounting standards and accounting quality. Journal of Accounting Research 46 (3): 467–498.CrossRef

Barth, M.E., W.R. Landsman, M. Lang, and C. Williams. (2012). Are IFRS-based and US GAAP-based accounting amounts comparable? Journal of Accounting and Economics 54 (1): 68–93.CrossRef

Barth, M.E., Y. Konchitchki, and W.R. Landsman. (2013). Cost of capital and earnings transparency. Journal of Accounting and Economics 55 (2–3): 206–224.CrossRef

Bebchuk, L., A. Cohen, and A. Ferrell. (2009). What matters in corporate governance? The Review of Financial Studies 22 (2): 783–827.CrossRef

Behn, B.K., J.-H. Choi, and T. Kang. (2008). Audit quality and properties of analyst earnings forecasts. The Accounting Review 83 (2): 327–349.CrossRef

Bell, J., Esq. (2019). U.S. securities offerings and exchange listing by foreign private issuers. Morrison Foerster. https://media2.mofo.com/documents/fpi-memo.pdf.

Bennedsen, M., and S. Zeume. (2018). Corporate tax havens and transparency. The Review of Financial Studies 31 (4): 1,221–1,264.CrossRef

Biddle, G.C., G. Hilary, and R.S. Verdi. (2009). How does financial reporting quality relate to investment efficiency? Journal of Accounting and Economics 48 (2–3): 112–131.CrossRef

Billings, B.K. 1999. Revisiting the relation between the default risk of debt and the earnings response coefficient. The Accounting Review 74 (4): 509–522.CrossRef

Black, D.E., S.S. Dikolli, and S.D. Dyreng. (2013). CEO pay-for-complexity and the risk of managerial diversion from multinational diversification. Contemporary Accounting Research 31: 103–135.CrossRef

Blouin, J. L., W. K. Black, and D. C. Johnston. (2017). Could the paradise papers lead to tax reforms? Podcast. Knowledge@Wharton. https://knowledge.wharton.upenn.edu/article/the-paradise-papers/

Bozanic, Z., J.L. Hoopes, J.R. Thornock, and B.M. Williams. (2017). IRS attention. Journal of Accounting Research 55 (1): 79–114.CrossRef

Bushman, R.M., and A.J. Smith. (2003). Transparency, financial accounting information, and corporate governance. Economic Policy Review 9 (1): 65–87.

Bushman, R.M., J.D. Piotroski, and A.J. Smith. (2004). What determines corporate transparency? Journal of Accounting Research 42 (2): 207–252.CrossRef

Cassell, C.A., L.A. Myers, and T.A. Seidel. (2015). Disclosure transparency about activity in valuation allowance and reserve accounts and accruals-based earnings management. Accounting, Organizations and Society 46: 23–38.CrossRef

Chen, K.-C., Q. Cheng, Y.C. Lin, Y.-C. Lin, and X. Xiao. (2016). Financial reporting quality of Chinese reverse merger firms: The reverse merger effect or the weak country effect? The Accounting Review 91 (5): 1,363–1,390.CrossRef

Chen, C.-W., B.F. Hepfer, P.J. Quinn, and R.J. Wilson. (2018). The effect of tax-motivated income shifting on information asymmetry. Review of Accounting Studies 23 (3): 958–1,004.CrossRef

Collins, D.W., and S.P. Kothari. (1989). An analysis of intertemporal and cross-sectional determinants of earnings response coefficients. Journal of Accounting and Economics 11 (2–3): 143–181.CrossRef

Daske, H., L. Hail, C. Leuz, and R. Verdi. (2008). Mandatory IFRS reporting around the world: Early evidence on the economic consequences. Journal of Accounting Research 46 (5): 1,085–1,142.

Dechow, P.M., and I.D. Dichev. (2002). The quality of accruals and earnings: The role of accrual estimation errors. The Accounting Review 77 (s-1): 35–59.CrossRef

Desai, M.A. (2005). The degradation of reported corporate profits. The Journal of Economic Perspectives 19 (4): 171.CrossRef

Desai, M.A. (2009). The decentering of the global firm. The World Economy 32 (9): 1,271–1,290.CrossRef

Desai, M.A., and D. Dharmapala. (2006). Corporate tax avoidance and high-powered incentives. Journal of Financial Economics 79 (1): 145–179.CrossRef

Desai, M.A., and D. Dharmapala. (2010). Do strong fences make strong neighbors? National Tax Journal 63 (4): 723–740.CrossRef

Desai, M.A., C.F. Foley, and J.R. Hines Jr. (2006). The demand for tax haven operations. Journal of Public Economics 90 (3): 513–531.CrossRef

Desai, M.A., A. Dyck, and L. Zingales. (2007). Theft and taxes. Journal of Financial Economics 84 (3): 591–623.CrossRef

Dharmapala, D. (2008). What problems and opportunities are created by tax havens? Oxford Review of Economic Policy 24 (4): 661–679.CrossRef

Dharmapala, D., and J.R. Hines Jr. (2009). Which countries become tax havens? Journal of Public Economics 93 (9–10): 1,058–1,068.CrossRef

Doidge, C., G.A. Karolyi, and R.M. Stulz. (2004). Why are foreign firms listed in the U.S. worth more? Journal of Financial Economics 71 (2): 205–238.CrossRef

Doyle, J.T., W. Ge, and S. McVay. (2007). Accruals quality and internal control over financial reporting. The Accounting Review 82 (5): 1,141–1,170.CrossRef

Drucker, J., and A. Barinka. (2015). Etsy’s B Corp status challenged by tax group over Irish haven. Bloomberg Business, September 1.

Durnev, A., T. Li, and M. Magnan. (2016). Are offshore firms worth more? Journal of Corporate Finance 36: 131–156.CrossRef

Durnev, A., T. Li, and M. Magnan. (2017). Beyond tax avoidance: Offshore firms’ institutional environment and financial reporting quality. Journal of Business Finance & Accounting 44 (5–6): 646–696.CrossRef

Dyreng, S.D., and B.P. Lindsey. (2009). Using financial accounting data to examine the effect of foreign operations located in tax havens and other countries on U.S. multinational firms’ tax rates. Journal of Accounting Research 47 (5): 1,283–1,316.CrossRef

Dyreng, S.D., M. Hanlon, and E.L. Maydew. (2012). Where do firms manage earnings? Review of Accounting Studies 17 (3): 649–687.CrossRef

El Ghoul, S., O. Guedhami, Y. Ni, J. Pittman, and S. Saadi. (2013). Does information asymmetry matter to equity pricing? Evidence from firms’ geographic location. Contemporary Accounting Research 30 (1): 140–181.CrossRef

Francis, D. (2016). 0.0001 percent of people and companies named in Panama papers are American. Foreign Policy (Online), May 9.

Francis, Jennifer, R. LaFond, P. Olsson, and K. Schipper. (2005a). The market pricing of accruals quality. Journal of Accounting and Economics 39 (2): 295–327.CrossRef

Francis, Jere R., I.K. Khurana, and R. Pereira. (2005b). Disclosure incentives and effects on cost of capital around the world. The Accounting Review 80 (4): 1,125–1,162.CrossRef

Francis, J.R., S. Huang, I.K. Khurana, and R. Pereira. (2009). Does corporate transparency contribute to efficient resource allocation? Journal of Accounting Research 47 (4): 943–989.CrossRef

Gelles, D. (2014). Obama budget seeks to eliminate inversions. New York Times DealBook, March 5.

Gravelle, J. G. (2015). Tax havens: International tax avoidance and evasion. Congressional Research Service Report for Congress: 7–5,700, www.crs.gov, R40623.

Hainmueller, J. (2012). Entropy balancing for causal effects: A multivariate reweighting method to produce balanced samples in observational studies. Political Analysis 20 (1): 25–46.CrossRef

Hanlon, M., and S. Heitzman. 2010. A review of tax research. Journal of Accounting and Economics 50 (2–3): 127–178.CrossRef

Hanlon, M., E.L. Maydew, and J.R. Thornock. (2015). Taking the long way home: U.S. tax evasion and offshore investments in U.S. equity and debt markets. The Journal of Finance 70 (1): 257–287.CrossRef

Harford, J., S.A. Mansi, and W.F. Maxwell. (2008). Corporate governance and firm cash holdings in the US. Journal of Financial Economics 87 (3): 535–555.CrossRef

Hayn, C. (1995). The information content of losses. Journal of Accounting and Economics 20 (2): 125–153.CrossRef

Heckman, J.J. (1979). Sample selection bias as a specification error. Econometrica 47 (1): 153–161.CrossRef

Hope, O.-K. (2003). Disclosure practices, enforcement of accounting standards, and analysts’ forecast accuracy: An international study. Journal of Accounting Research 41 (2): 235–272.CrossRef

Jensen, M.C., and W.H. Meckling. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics 3 (4): 305–360.CrossRef

Kapner, S. (2015). How Etsy crafted a tax strategy in Ireland: Some transparency was sacrificed when intellectual property was transferred to Dublin. Wall Street Journal (Online), August 16, sec. Tech.

Kim, J.-B., and T. Li. (2014). Multinationals’ offshore operations, tax avoidance, and firm-specific information flows: International evidence. Journal of International Financial Management & Accounting 25 (1): 38–89.CrossRef

Kothari, S.P., S. Shu, and P.D. Wysocki. (2009). Do managers withhold bad news? Journal of Accounting Research 47 (1): 241–276.CrossRef

Kuehner-Hebert, K. (2015). Etsy avoids disclosure with Irish tax haven. CFO (Online), August 14.

Kun, O. (2004). Corporate inversions: The interplay of tax, corporate, and economic implications. Delaware Journal of Corporate Law 29 (2): 313–376.

La Porta, R., F. Lopez-de-Silanes, A. Shleifer, and R.W. Vishny. (1998). Law and finance. Journal of Political Economy 106 (6): 1,113–1,155.CrossRef

Lang, M., and M. Maffett. (2010). Economic effects of transparency in international equity markets: A review and suggestions for future research. Foundations and Trends in Accounting 5 (3): 175–241.CrossRef

Lang, M., J.S. Raedy, and M.H. Yetman. (2003). How representative are firms that are cross-listed in the United States? An analysis of accounting quality. Journal of Accounting Research 41 (2): 363–386.CrossRef

Lang, M., K.V. Lins, and M. Maffett. (2012). Transparency, liquidity, and valuation: International evidence on when transparency matters most. Journal of Accounting Research 50 (3): 729–774.CrossRef

Leikvang, H. (2012). Piercing the veil of secrecy: Securing effective exchange of information to remedy the harmful effects of tax havens. Vanderbilt Journal of Transnational Law 45: 293–342.

Lennox, C.S., J.R. Francis, and Z. Wang. (2012). Selection models in accounting research. The Accounting Review 87 (2): 589–616.CrossRef

Lewellen, C., L. Mauler, and L. Watson. (2021). Tax haven incorporation and the cost of capital. Contemporary Accounting Research 38 (4): 2,982–3,016.CrossRef

Li, J. (2006). The rise and fall of Chinese tax incentives an implications for international tax debates. Florida Tax Review 8 (7): 669–712.

Markle, K.S., and D.A. Shackelford. (2012). Cross-country comparisons of corporate income taxes. National Tax Journal 65 (3): 493–527.CrossRef

McGuire, S.T., D. Wang, and R.J. Wilson. (2014). Dual class ownership and tax avoidance. The Accounting Review 89 (4): 1,487–1,516.CrossRef

McNichols, M.F. (2002). Discussion of the quality of accruals and earnings: The role of accrual estimation errors. The Accounting Review 77 (s-1): 61–69.CrossRef

Moon, W.J. (2018). Tax havens as producers of corporate law. Michigan Law Review 116 (6): 1,081–1,100.CrossRef

Morgenthau, R. (2012). These islands aren’t just a shelter from taxes. New York Times, May 6 edition.

Nemeth, L. (2017). Foreign private issuer guide: How US securities law obligations differ from those of domestic issuers. Squire Patton Boggs. https://www.squirepattonboggs.com/en/insights/publications/2017/06/foreign-private-issuer-guide-how-us-securities.

O’Donovan, J., H.F. Wagner, and S. Zeume. (2019). The value of offshore secrets: Evidence from the Panama papers. The Review of Financial Studies 32 (11): 4,117–4,155.CrossRef

OECD. (1998). Harmful tax competition: An emerging global issue. OECD Publishing.CrossRef

Petersen, M.A. (2009). Estimating standard errors in finance panel data sets: comparing approaches. The Review of Financial Studies 22 (1): 435–480.CrossRef

Plitch, P. (2003). Activists engage Ingersoll-Rand about tax haven. Wall Street Journal, Eastern edition, May 28.

Prawitt, D.F., J.L. Smith, and D.A. Wood. (2009). Internal audit quality and earnings management. The Accounting Review 84 (4): 1,255–1,280.CrossRef

Rankin, J. (2014). Tax inversion takes a hit as Walgreen Alliance boots stays in US. The Guardian, August 6, sec. Business.

Seida, J.A., and W.F. Wempe. (2004). Effective tax rate changes and earnings stripping following corporate inversion. National Tax Journal 57 (4): 805–828.CrossRef

Siegel, J. (2005). Can foreign firms bond themselves effectively by renting U.S. securities laws? Journal of Financial Economics 75 (2): 319–359.CrossRef

Tax Justice Network. (2007). Briefing Paper: Identifying tax havens and offshore finance centres. http://www.taxjustice.net/cms/upload/pdf/Identifying_Tax_Havens_Jul_07.pdf.

Town, N., and J. Betts. (2015). Corporate governance and directors’ duties in Bermuda: Overview. Westlaw. https://content.next.westlaw.com/3-523-2418?__lrTS=20200827174058198&transitionType=Default&contextData=(sc.Default)&firstPage=true.

U.S. Senate Permanent Subcommittee on Investigations. (2006). Tax haven abuses: The enablers, the tools and secrecy. United States Senate.

Warfield, T.D., J.J. Wild, and K.L. Wild. (1995). Managerial ownership, accounting choices, and informativeness of earnings. Journal of Accounting and Economics 20 (1): 61–91.CrossRef

Worrell, D., and S. Lowe. (2011). International business and financial services centres in the Caribbean. Economic Review XXXVII (Number 1).

Title: Tax haven incorporation and financial reporting transparency
Author: Christina M. Lewellen
Publication date: 27-04-2022
Publisher: Springer US
Published in: Review of Accounting Studies / Issue 3/2023
Print ISSN: 1380-6653
Electronic ISSN: 1573-7136
DOI: https://doi.org/10.1007/s11142-022-09676-2

Springer Professional

Abstract

Please log in to get access to your license.

Dont have a licence yet? Then find out more about our products and how to get one now:

Springer Professional "Wirtschaft+Technik"

Springer Professional "Wirtschaft"

Other articles of this Issue 3/2023

Earnings forecasts of female CEOs: quality and consequences

Is tax return information useful to equity investors?

Real earnings management in the motion picture industry: strengthening the inferences from academic research

Revenue-expense matching and performance measure choice

Bank financial reporting opacity and regulatory intervention

When do firms use one set of books in an international tax compliance game?