Cost Structure and Tax-Motivated Income Shifting

• 成果类型: Article
• 署名作者: McGuire, Sean T.; Rane, Scott G.; Weaver, Connie D.
• 署名单位: Texas A&M University System; Texas A&M University College Station; Mays Business School; State University System of Florida; University of Florida
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/TAR-2020-0190
• 发表日期: 2023
• 页码: 435-456
• 关键词: uncertainty; management

摘要

We examine whether cost structure influences tax-motivated income shifting. We predict and find that U.S. multinational corporations (MNCs) with a less rigid cost structure engage in greater levels of tax-motivated income shifting relative to MNCs with a more rigid cost structure. This result is consistent with a less rigid cost structure providing greater flexibility to enable MNCs to take advantage of income-shifting opportunities. Further, we find that this relation is more pronounced when firms face greater costs in adjusting their operations, have less transfer pricing flexibility, and operate in a more uncertain environment. These results suggest that firms with less rigid cost structures possess the strategic operating and accounting flexibility necessary to take advantage of incomeshifting opportunities. We provide evidence suggesting that a firm's cost structure, a fundamental attribute of a firm's business model, is a distinct and incrementally important determinant of tax-motivated income shifting.