Strategic Subsidiary Disclosure

• 成果类型: Article
• 署名作者: Dyreng, Scott D.; Hoopes, Jeffrey L.; Langetieg, Patrick; Wilde, Jaron H.
• 署名单位: Duke University; University of North Carolina; University of North Carolina Chapel Hill; University of Iowa
• 刊物名称: JOURNAL OF ACCOUNTING RESEARCH
• ISSN/ISSBN: 0021-8456
• DOI: 10.1111/1475-679X.12308
• 发表日期: 2020
• 页码: 643-692
• 关键词: Financial constraints; reputational costs; avoidance evidence; tax; return; FIRMS; RISK

摘要

Although subsidiary disclosures in firms' filings with the Securities and Exchanges Commission (SEC; Exhibit 21) represent the most granular required public disclosure of a firm's geographic footprint, little is understood about the quality of the disclosure, and anecdotal evidence suggests firms may not fully comply with the disclosure requirements. We use data provided by multinational firms to the Internal Revenue Service regarding their foreign subsidiary locations to explore the accuracy of public subsidiary disclosures on Exhibit 21 of Form 10-K per SEC rules. The overall incidence of nondisclosure is low, suggesting that most firms comply with Exhibit 21 disclosure rules, and that for most applications, Exhibit 21 disclosures provide a reasonable proxy for locations of significant subsidiaries. Nevertheless, there is some evidence of nondisclosure, particularly when subsidiaries are in tax havens, when the firm is more highly scrutinized in the media, or when the firm has other characteristics consistent with low-quality disclosures such as SEC comment letters.