Country-by-Country reporting, corporate tax avoidance, and supply chain structure: A bunching analysis based on income manipulation by Chinese multinational corporations

IF 4.8 2区经济学 Q1 BUSINESS, FINANCE

Pacific-Basin Finance Journal Pub Date : 2024-10-30 DOI:10.1016/j.pacfin.2024.102570

Sida Bai , Jiaxing Zheng

{"title":"Country-by-Country reporting, corporate tax avoidance, and supply chain structure: A bunching analysis based on income manipulation by Chinese multinational corporations","authors":"Sida Bai , Jiaxing Zheng","doi":"10.1016/j.pacfin.2024.102570","DOIUrl":null,"url":null,"abstract":"<div><div>Due to the endogeneity issue arising from the voluntary manipulation of MNCs own operating income, we employed bunching analysis to investigate the impact of Country-by-Country reporting(CbCR) on tax avoidance behavior of Chinese multinational corporations. The study found that multinational corporations' operating income exhibited bunching at 5.5 billion RMB. Within the bunching interval, the distribution of actual-value enterprises was 111 % higher than that of counterfactual enterprises, with an elasticity of 0.0359. Tax avoidance by multinational corporations significantly decreased within the manipulation interval, leading to a noticeable increase in taxable amounts. A series of robustness tests confirmed the validity of the above conclusions. This suggests that CbCR could serve as an important policy tool to combat tax base erosion and profit shifting. Furthermore, CbCR led Chinese multinational corporations to increase their investment scale while reducing profit shifting, but also resulted in a decrease in employment and a more concentrated supply chain structure. Careful evaluation is needed regarding the future expansion of the scope and target users of CbCR.</div></div>","PeriodicalId":48074,"journal":{"name":"Pacific-Basin Finance Journal","volume":"88 ","pages":"Article 102570"},"PeriodicalIF":4.8000,"publicationDate":"2024-10-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Pacific-Basin Finance Journal","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S0927538X24003226","RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}

引用次数: 0

Abstract

Due to the endogeneity issue arising from the voluntary manipulation of MNCs own operating income, we employed bunching analysis to investigate the impact of Country-by-Country reporting(CbCR) on tax avoidance behavior of Chinese multinational corporations. The study found that multinational corporations' operating income exhibited bunching at 5.5 billion RMB. Within the bunching interval, the distribution of actual-value enterprises was 111 % higher than that of counterfactual enterprises, with an elasticity of 0.0359. Tax avoidance by multinational corporations significantly decreased within the manipulation interval, leading to a noticeable increase in taxable amounts. A series of robustness tests confirmed the validity of the above conclusions. This suggests that CbCR could serve as an important policy tool to combat tax base erosion and profit shifting. Furthermore, CbCR led Chinese multinational corporations to increase their investment scale while reducing profit shifting, but also resulted in a decrease in employment and a more concentrated supply chain structure. Careful evaluation is needed regarding the future expansion of the scope and target users of CbCR.

查看原文本刊更多论文

逐国报告、企业避税和供应链结构：基于中国跨国公司收入操纵的分组分析

由于跨国公司自愿操纵自身营业收入所产生的内生性问题，我们采用了扎堆分析法来研究逐国报告（CbCR）对中国跨国公司避税行为的影响。研究发现，跨国公司的营业收入在 55 亿元人民币时呈现扎堆现象。在该区间内，实际值企业的分布比反面值企业的分布高 111%，弹性为 0.0359。在操纵区间内，跨国公司的避税行为明显减少，导致应纳税额明显增加。一系列稳健性检验证实了上述结论的正确性。这表明 CbCR 可以作为打击税基侵蚀和利润转移的重要政策工具。此外，CbCR 在减少利润转移的同时，也使中国跨国公司扩大了投资规模，但同时也导致了就业人数的减少和供应链结构的更加集中。对于未来扩大 CbCR 的适用范围和目标用户，需要进行认真评估。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

求助全文

约1分钟内获得全文求助全文

来源期刊

Pacific-Basin Finance Journal BUSINESS, FINANCE-

CiteScore

6.80

自引率

6.50%

发文量

157

期刊介绍： The Pacific-Basin Finance Journal is aimed at providing a specialized forum for the publication of academic research on capital markets of the Asia-Pacific countries. Primary emphasis will be placed on the highest quality empirical and theoretical research in the following areas: • Market Micro-structure; • Investment and Portfolio Management; • Theories of Market Equilibrium; • Valuation of Financial and Real Assets; • Behavior of Asset Prices in Financial Sectors; • Normative Theory of Financial Management; • Capital Markets of Development; • Market Mechanisms.