Income-shifting arrangements of US multinational corporations and future stock price crash risk

IF 1.1 Q3 BUSINESS, FINANCE

Journal of Accounting Literature Pub Date : 2024-03-14 DOI:10.1108/jal-12-2023-0214

Grant Richardson, Grantley Taylor, M. Hasan

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Abstract

PurposeThis study examines the importance of income income-shifting arrangements of US multinational corporations (MNCs) on future stock price crash risk.Design/methodology/approachThis study employs a sample of 7,641 corporation-year observations over the 2005–2017 period and uses ordinary least squares regression analysis.FindingsThe authors find that the income-shifting arrangements of MNCs are positively and significantly associated with stock price crash risk after controlling for corporate tax avoidance and other known determinants of stock price crash risk in the regression model. This result is robust to alternative measures of stock price crash risk and income-shifting, and several endogeneity tests. The authors also observe that income-shifting arrangements increase stock price crash risk both directly and indirectly through the information opacity channel. Finally, in cross-sectional analyses, the authors find that the positive association between income-shifting and stock price crash risk is more pronounced for MNCs that use tax haven subsidiaries and have weak corporate governance mechanisms.Originality/valueThe authors provide new empirical evidence that MNCs will likely face significant capital market consequences regarding their income-shifting arrangements.

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美国跨国公司的收入转移安排与未来股价暴跌风险

研究结果作者发现，在回归模型中控制了企业避税和其他已知的股价暴跌风险决定因素后，跨国公司的收入转移安排与股价暴跌风险显著正相关。这一结果对股价暴跌风险和收入转移的其他衡量标准以及若干内生性检验都是稳健的。作者还发现，收入转移安排会直接或间接地通过信息不透明渠道增加股价暴跌风险。最后，作者在横截面分析中发现，对于使用避税天堂子公司且公司治理机制薄弱的跨国公司而言，收入转移与股价暴跌风险之间的正相关关系更为明显。原创性/价值作者提供了新的经验证据，证明跨国公司的收入转移安排可能会对资本市场造成重大影响。

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来源期刊

Journal of Accounting Literature BUSINESS, FINANCE-

CiteScore

6.50

自引率

0.00%

发文量

期刊介绍： The objective of the Journal is to publish papers that make a fundamental and substantial contribution to the understanding of accounting phenomena. To this end, the Journal intends to publish papers that (1) synthesize an area of research in a concise and rigorous manner to assist academics and others to gain knowledge and appreciation of diverse research areas or (2) present high quality, multi-method, original research on a broad range of topics relevant to accounting, auditing and taxation. Topical coverage is broad and inclusive covering virtually all aspects of accounting. Consistent with the historical mission of the Journal, it is expected that the lead article of each issue will be a synthesis article on an important research topic. Other manuscripts to be included in a given issue will be a mix of synthesis and original research papers. In addition to traditional research topics and methods, we actively solicit manuscripts of the including, but not limited to, the following: • meta-analyses • field studies • critiques of papers published in other journals • emerging developments in accounting theory • commentaries on current issues • innovative experimental research with strong grounding in cognitive, social or anthropological sciences • creative archival analyses using non-standard methodologies or data sources with strong grounding in various social sciences • book reviews • "idea" papers that don''t fit into other established categories.