Offshore activities and corporate tax avoidance

Z. Chen, O.-K. Hope, Q. Li and Y. Li ()
Additional contact information
Y. Li: Audencia Business School

Post-Print from HAL

Abstract: We investigate the relation between tax avoidance and offshore activities using a new text-based measure for offshore activities based on Hoberg and Moon (2017, 2019). Our evidence shows that, although providing cross-border tax-avoidance opportunities, offshore activities reduce the marginal benefits of tax avoidance by introducing incremental foreign-market risk exposure. We find that the intensity of offshore sales of outputs is positively associated with the cash effective tax rate. The effect is stronger when the offshore sales rely on overseas production rather than domestic production, when the offshore sales are located in countries with higher economic uncertainty, when the firm has a lower ability to pass on shocks, and when the firm has less flexibility in adjusting tax strategies.

Keywords: Offshore activities; Tax avoidance; Uncertainty; Flexibility; Passing on shocks; Tax uncertainty; Multinational firms (search for similar items in EconPapers)
Date: 2024-01
Note: View the original document on HAL open archive server: https://hal.science/hal-04535146v6
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Published in Journal of Corporate Finance, 2024, 85 (April 2024), ⟨10.1016/j.jcorpfin.2023.102536⟩

Downloads: (external link)
https://hal.science/hal-04535146v6/document (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04535146

DOI: 10.1016/j.jcorpfin.2023.102536

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().