Can corporate diversification induce more tax avoidance?

Suyan Zheng

Journal of Multinational Financial Management, 2017, vol. 41, issue C, 47-60

Abstract: This study investigates whether there is a tax avoidance difference between stand-alone firms and diversified firms. Stand-alone firms are defined as firms that always report only one business segment and diversified firms as firms that report more than one business segment. I show that diversified firms persistently engage in fewer tax avoidance practices than stand-alone firms. This finding cannot be explained by firm characteristics and ownership structure, and is insensitive to alternative testing methods. I interpret the main result as indicating that lower levels of tax avoidance in diversified firms are not primarily altered by corporate diversification, and tax effects are not of first-order importance in corporate diversification.

Keywords: G31; M14; H26; Corporate Diversification; Tax Avoidance; Transfer Pricing; Ownership Structure (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:mulfin:v:41:y:2017:i:c:p:47-60

DOI: 10.1016/j.mulfin.2017.05.008

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