The influence of governance infrastructure and corporate governance on profit shifting

• 成果类型: Article
• 署名作者: Sugathan, Anish; George, Rejie
• 署名单位: Indian Institute of Management (IIM System); Indian Institute of Management Ahmedabad; Harvard University; Indian Institute of Management (IIM System); Indian Institute of Management Bangalore
• 刊物名称: JOURNAL OF INTERNATIONAL BUSINESS STUDIES
• ISSN/ISSBN: 0047-2506
• DOI: 10.1057/jibs.2015.23
• 发表日期: 2015
• 页码: 886-916
• 关键词: Foreign ownership; multinational corporations (MNCs) and enterprises (MNEs); Profit shifting; governance infrastructure; principal-principal agency; corporate governance

摘要

In this article we develop a conceptual model to examine the influence of quality of country-level governance infrastructure and corporate governance effectiveness on profit shifting. We empirically test propositions derived from the model with a unique firm-level data set and using multiple indicators of governance infrastructure quality and corporate governance mechanisms. We estimate that on average about 6% of total pre-tax income is shifted out of foreign-owned firms in India. We show that governance infrastructure that improves collective action and transparency in both the foreign-and host-country reduces shifting. On the other hand, secure property rights and efficient contracting in the foreign country increases shifting. We also find that monitoring by foreign institutional investors restricts shifting.