Offshore Expertise for Onshore Companies: Director Connections to Island Tax Havens and Corporate Tax Policy

• 成果类型: Article
• 署名作者: Jiang, Chao; Kubick, Thomas R.; Miletkov, Mihail K.; Wintoki, M. Babajide
• 署名单位: University of South Carolina System; University of South Carolina Columbia; University of Kansas; University System Of New Hampshire; University of New Hampshire
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2017.2776
• 发表日期: 2018
• 页码: 3241-3268
• 关键词: tax havens; Tax avoidance; Tax aggressiveness; social networks; director interlocks

摘要

Theory and recent empirical literature suggest that social and professional connections may influence corporate policy. However, inference may be biased by the possibility that firms who share peers also share unobserved characteristics that are correlated with observed policy. Using a novel identification strategy, we predict and find that director connections through well-known island tax havens have a significant effect on corporate tax policy. Specifically, we find that U.S. firms with directors who are connected to firms domiciled on the islands of the Bahamas, Bermuda, or the Caymans exhibit significantly greater tax avoidance than other U.S. firms. The presence or arrival of an island director is associated with a reduction of between one and three percentage points in the firm's effective tax rate. We also observe a significant increase in the use of tax haven subsidiaries following the arrival of the island director.