Which countries become tax havens?

Dharmapala, Dhammika; Hines, James R.

doi:10.1016/j.jpubeco.2009.07.005

Cited by 411 publications

(377 citation statements)

References 35 publications

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“…88 For example, some questions include 1) How do the economies of tax havens fare?, 2) How much investment do they attract?, and 3) What happens to neighboring countries? See Hines (2005), Desai et al (2005a and2005b), Dharmapala and Hines (2006), Desai and Hines (2004), Hines and Rice (1994), , and Slemrod and Wilson (2009). These papers generally deal with macroeconomic tax policy effects, an area almost exclusively dominated by economists and in the interest of space we do not conduct a detailed review here.…”

Section: Corporate Inversions To Tax Havensmentioning

confidence: 99%

A review of tax research

Hanlon¹,

Heitzman²

2010

Journal of Accounting and Economics

2,058

646

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Abstract:In this paper, we present a review of tax research. We survey four main areas of the literature: 1) the informational role of income tax expense reported for financial accounting, 2) corporate tax avoidance, 3) corporate decision-making including investment, capital structure, and organizational form, and 4) taxes and asset pricing. We summarize the research areas and questions examined to date and what we have learned or not learned from the work completed thus far. In addition, we provide our opinion as to the interesting and important issues for future research. ______________________This paper was prepared for the 2009 Journal of Accounting and Economics Conference. We appreciate comments from Scott Dyreng, Mihir Desai (discussant), S.P. Kothari (editor), John Long, Ed Maydew, Lillian Mills, Tom Omer, Sonja Rego, Doug Shackelford, Terry Shevlin, Joel Slemrod, Cliff Smith, David Weber, Ryan Wilson, Jerry Zimmerman, George Zodrow, and conference participants at the JAE Conference as well as at the 2009 University of North Carolina Tax Symposium and the discussant there, Bill Gentry. All errors and omissions are our own. * Corresponding author: 100 Main Street, Cambridge, MA. email: mhanlon@mit.edu. 1 A Review of Tax Research IntroductionIn this paper, we review tax research in accounting as well as tax research in economics and finance to the extent that it is related to or is affected by research in accounting. Shackelford and Shevlin (2001) provide a careful and thorough review of empirical tax research in accounting in the prior Journal of Accounting and Economics review volume. Shackelford and Shevlin limit their review to research published in accounting outlets and describe the development of the relatively young archival, microeconomic-based income tax literature that arose from the Scholes andWolfson framework. In his discussion of the review, Maydew (2001) emphasizes the need for tax researchers in accounting to think more broadly and to incorporate more theory and evidence from economics and finance. We agree. Tax research has a long history in many disciplines; this fact cannot be ignored. Our goal in this paper is to integrate the theoretical and empirical tax research from accounting, economics, and finance, to summarize what is known and unknown, and to offer suggestions for future research.The multidisciplinary nature of tax research is what makes tax research exciting (yes, exciting), yet difficult. Tax research can be difficult not only because one has to follow tax studies in accounting, finance, economics, and law (through academic institutions, governmental agencies, and policy think tanks), but also because different disciplines often use different languages and have different perspectives. 1 For example, economists generally focus on tax compliance, tax incidence (such as who bears the corporate tax), investment and economic growth effects (such as how taxes 1 Slemrod (1992a) characterizes these differences as economists studying what corporations actually do and accountants stud...

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Section: Corporate Inversions To Tax Havensmentioning

confidence: 99%

A review of tax research

Hanlon¹,

Heitzman²

2010

Journal of Accounting and Economics

2,058

646

View full text Add to dashboard Cite

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“…A considerable literature, for example, explains the formation of 'business groups' as preferred organisational forms in emerging markets as one such response mechanism (Khanna and Yafeh 2007) summarise this extensive literature). The most successful THOFCs, by contrast, are recognised for their well-developed legal and financial systems, particularly those havens that also act as offshore financial centres (OFCs) (Dharmapala and Hines 2009;Rose and Spiegel 2007;Roberts 1995). The drive for offshore incorporation and FDI flows may, therefore, be driven not only by domestic capital market imperfections and the needs of EMNEs to augment their existing capital structure, but also by access to a more favourable institutional environment.…”

Section: Domestic Institutions: Multi-state Experience In Indiamentioning

confidence: 99%

Internalisation Theory and Outward Direct Investment by Emerging Market Multinationals

Buckley

2017

Manag Int Rev

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The rise of multinational enterprises from emerging countries (EMNEs) poses an important test for theories of the multinational enterprise such as internalisation theory. It has been contended that new phenomena need new theory. This paper proposes that internalisation theory is appropriate to analyse EMNEs. This paper examines four approaches to EMNEs-international investment strategies, domestic market imperfections, international corporate networks and domestic institutions-and three case studies-Chinese outward FDI, Indian foreign acquisitions and investment in tax havens-to show the enduring relevance and predictive power of internalisation theory. This analysis encompasses many other approaches as special cases of internalisation theory. The use of internalisation theory to analyse EMNEs is to be commended, not only because of its theoretical inclusivity, but also because it has the ability to connect and to explain seemingly desperate phenomena.

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“…30 Applying the tax haven definition in Dharmapala and Hines (2009) 31 and using the information in AMADEUS on the location of non-European affiliates, 58% of the affiliates in our sample belong to multinational entities that include at least one affiliate in a non-European tax haven.…”

mentioning

confidence: 99%

Earnings shocks and tax-motivated income-shifting: Evidence from European multinationals

Dharmapala

Riedel

2013

Journal of Public Economics

Self Cite

217

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This paper presents a new approach to estimating the existence and magnitude of taxmotivated income shifting within multinational corporations. Existing studies of income shifting use changes in corporate tax rates as a source of identification. In contrast, this paper exploits exogenous earnings shocks at the parent firm and investigates how these shocks propagate across low-tax and high-tax multinational subsidiaries. This approach is implemented using a large panel of European multinational affiliates over the period [1995][1996][1997][1998][1999][2000][2001][2002][2003][2004][2005]. The central result is that parents' positive earnings shocks are associated with a significantly positive increase in pretax profits at low-tax affiliates, relative to the effect on the pretax profits of high-tax affiliates. The result is robust to controlling for various other differences between low-tax and high-tax affiliates and for country-pair-year fixed effects. Additional tests suggest that the estimated effect is attributable primarily to the strategic use of debt across affiliates. The magnitude of income shifting estimated using this approach is substantial, but somewhat smaller than that found in the previous literature. Acknowledgments:We thank participants at the

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Which countries become tax havens?

Cited by 411 publications

References 35 publications

A review of tax research

A review of tax research

Internalisation Theory and Outward Direct Investment by Emerging Market Multinationals

Earnings shocks and tax-motivated income-shifting: Evidence from European multinationals

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