Tax haven incorporation and financial reporting transparency

• 成果类型: Article
• 署名作者: Lewellen, Christina M.
• 署名单位: North Carolina State University
• 刊物名称: REVIEW OF ACCOUNTING STUDIES
• ISSN/ISSBN: 1380-6653
• DOI: 10.1007/s11142-022-09676-2
• 发表日期: 2023
• 页码: 1811-1855
• 关键词: accounting standards; Audit quality; earnings; FIRMS; INFORMATION; accruals; avoidance; OWNERSHIP; equity; debt

摘要

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.