The Value of International Income-Shifting Opportunities to U.S. Multinational Firms

Is Tax Return Information Useful to Equity Investors?

“…Discussions with a former employee of a major financial institution whose role was to oversee informationtransmission policies for the institution's syndicated loans suggest that (a) the institution almost always requested the borrower's entire corporate tax return as filed and (b) that as many as 10,000 unique individuals might have access to the tax return for large syndicated loans.21 The use of tax reporting to implement non-tax policies and subsidies adds noise to tax return numbers both by itself and by providing incentives for firms to manipulate taxable income across time, jurisdictions, and tax classifications (e.g., capital vs. ordinary income) to take advantage of these rules(Scholes et al 1992;Lester 2015;Demeré and Gramlich 2017).…”