Does a common set of accounting standards affect tax-motivated income shifting for multinational firms?

• 成果类型: Article
• 署名作者: De Simone, Lisa
• 署名单位: Stanford University
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2015.06.002
• 发表日期: 2016
• 关键词: MANDATORY IFRS ADOPTION; financial statement comparability; foreign direct-investment; earnings management; capital structure; Market reaction; incentives; avoidance; location; CHOICE

摘要

I test whether adoption of IFRS by individual affiliates of multinational entities (MNEs) for unconsolidated financial reporting facilitates tax-motivated income shifting. MNEs often justify transfer prices to tax authorities by benchmarking intercompany profit allocations against a range of book profit rates reported by economically comparable, independent firms that use similar accounting standards. Additional qualifying benchmark firms resulting from IFRS adoption could allow managers to support more tax-advantaged transfer prices. Using a database of European unconsolidated financial and ownership information over 2003-2012, I first document an increase in the arm's length range of book profits reported by potential IFRS benchmark firms following affiliate adoption of IFRS. I then estimate a statistically and economically significant 11.3 percent tax-motivated change in reported book pre-tax profits following affiliate IFRS adoption, relative to pre-adoption and non-adopter affiliate-years. (C) 2015 Elsevier B.V. All rights reserved.