A Potential Risk of Increasing Cross-National Distance: Evidence from Less Sustainable Tax Policies
Junjian Gu ()
Additional contact information
Junjian Gu: Faculty of Business Sciences, University of Tsukuba, Tokyo 112-0012, Japan
Sustainability, 2019, vol. 11, issue 9, 1-1
This study explores a possible risk of overseas investment in long cross-national distance host countries using the foreign direct investment (FDI) data in Japan. We expect that increasing cross-national distance would relate to the less sustainable tax policies by increasing the differences in economic, political, administrative, cultural, demographic, knowledge, and geographic perspectives, which enhance the motivation of tax aggressiveness and the likelihood of earnings management. Consistent with our expectations, we find that firms with longer cross-national distance are less likely to adopt sustainable tax policies. After some robust tests, our main findings remain unchanged. In additional analysis, we find the above relation is weakened when firms invest in a tax-haven country or have a high proportion of foreign ownership, while it is strengthened when firms meet an earnings benchmark. Overall, our results suggest the one risk of increasing cross-national distance between host country and home country is less sustainable tax policies.
Keywords: cross-national distance; sustainable tax policy; foreign direct investment (search for similar items in EconPapers)
JEL-codes: Q Q0 Q2 Q3 Q5 Q56 O13 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:11:y:2019:i:9:p:2639-:d:229186
Access Statistics for this article
Sustainability is currently edited by Prof. Dr. Marc A. Rosen
More articles in Sustainability from MDPI, Open Access Journal
Bibliographic data for series maintained by XML Conversion Team ().