 Tax avoidance regulations and stock market responsesKatarzyna Bilicka, Danjue Clancey-Shang and Yaxuan Qi Journal of International Financial Markets, Institutions and Money, 2022, vol. 77, issue C Abstract: In this paper, we examine the impact of tax avoidance regulations on the stock market behavior of multinational corporations (MNCs). We use the introduction of the worldwide debt cap reform in 2010 in the UK that limited the extent of profit shifting for a group of multinational firms as a quasi-natural experiment. We find that MNCs affected by the reform have higher stock market returns than unaffected MNCs after the reform. The results are driven by firms with lower quality of corporate governance and firms with access to tax haven affiliates. Further, the affected MNCs also see extremely negative returns less frequently than before the reform. Our findings are consistent with the notion that anti-tax avoidance regulation is perceived by investors as a tool to help curb aggressive tax planning and improve information transparency, especially in environments where this transparency is lower. Keywords: Debt shifting; Multinational companies; Tax avoidance; Stock market responses (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:intfin:v:77:y:2022:i:c:s1042443121001888 DOI: 10.1016/j.intfin.2021.101483 Access Statistics for this article Journal of International Financial Markets, Institutions and Money is currently edited by I. Mathur and C. J. Neely More articles in Journal of International Financial Markets, Institutions and Money from Elsevier |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.