Abstract

http://ssrn.com/abstract=1325895
 
 

References (20)



 
 

Citations (1)



 


 



Beyond Tax Sheltering: Offshore Firms’ Institutional Environment and Financial Reporting


Art Durnev


University of Iowa - Henry B. Tippie College of Business

TieMei Li


University of Ottawa - School of Management

Michel Magnan


Concordia University - Department of Accountancy

September 1, 2014

CAAA Annual Conference 2009 Paper
AFA 2011 Denver Meetings Paper

Abstract:     
We explore how firms’ operations in Offshore Financial Centers (OFCs) through subsidiaries or affiliates affect the quality of financial reporting. Using a unique and large sample of firms that have subsidiaries or affiliates in OFCs but registered their headquarters in 15 countries with the strictest legal regimes, we find that firms with offshore operations have lower reporting quality. We also find that as the offshore characteristics become more prevalent, firms are more likely to manage earnings through both accruals and real activities. We provide evidence that U.S. firms with OFC subsidiaries or affiliates exhibit poorer financial reporting quality than U.S. firms with solely domestic operations while U.S. firms with non-OFC foreign subsidiaries or affiliates do not. Moreover, we show that OFCs have an effect on earnings quality that extends beyond tax sheltering. We conclude that the assessment of a firm’s institutional environment must encompass the registration status of its subsidiaries or affiliates as well as its own.

Number of Pages in PDF File: 56

Keywords: Offshore Financial Centers, Financial Reporting, Earnings Management

JEL Classification: F36, G15, G34, H26, K22, M41

working papers series





Download This Paper

Date posted: January 5, 2010 ; Last revised: October 1, 2014

Suggested Citation

Durnev, Art and Li, TieMei and Magnan, Michel, Beyond Tax Sheltering: Offshore Firms’ Institutional Environment and Financial Reporting (September 1, 2014). CAAA Annual Conference 2009 Paper; AFA 2011 Denver Meetings Paper. Available at SSRN: http://ssrn.com/abstract=1325895 or http://dx.doi.org/10.2139/ssrn.1325895

Contact Information

Artyom Durnev
University of Iowa - Henry B. Tippie College of Business ( email )
108 Pappajohn Business Building
Iowa City, IA 52242-1000
United States
(514) 398-5394 (Phone)
(514) 398-3876 (Fax)
HOME PAGE: http://www.artdurnev.com
TieMei Li (Contact Author)
University of Ottawa - School of Management ( email )
136 Jean-Jacques Lussier Street
Ottawa, Ontario K1N 6N5
Canada
Michel Magnan
Concordia University - Department of Accountancy ( email )
Montreal, Quebec H3G 1M8
Canada
Feedback to SSRN


Paper statistics
Abstract Views: 1,776
Downloads: 4
References:  20
Citations:  1
Paper comments
No comments have been made on this paper

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo7 in 0.313 seconds