Information Flows, Tax Avoidance Policy and Firm-Level Institutional Variation: International Evidence

44 Pages Posted: 16 Jan 2012 Last revised: 25 Jan 2012

See all articles by Jeong-Bon Kim

Jeong-Bon Kim

City University of Hong Kong

TieMei Li

University of Ottawa - School of Management

Date Written: January 15, 2012

Abstract

Using a large sample from 14 Offshore Financial Centers (OFCs) and from 35 non-OFC countries and jurisdictions, we investigate the extent to which firm-specific information flows are capitalized into stock prices measured by stock price synchronicity. Moreover, we explore the firm-specific information flows of U.S. and U.K. companies that set up affiliates in an OFC or OFCs. We find that synchronicity is higher via a firm’s operations in OFCs, either through direct legal registration or incorporation or, indirectly, through subsidiaries and affiliates than non-offshore companies. Our evidence is important, because it reveals the intertwined effects between tax avoidance policy and firm-level institutional variation on the impounded firm-specific information into stock prices. Furthermore, we also find that the extent of synchronicity varies regarding offshore attributes.

Keywords: Offshore Financial Centers, Market Synchronicity, Tax Avoidance, Legal Institution

JEL Classification: G15, H26, M41, F36

Suggested Citation

Kim, Jeong-Bon and Li, TieMei, Information Flows, Tax Avoidance Policy and Firm-Level Institutional Variation: International Evidence (January 15, 2012). CAAA Annual Conference 2012, Available at SSRN: https://ssrn.com/abstract=1985822 or http://dx.doi.org/10.2139/ssrn.1985822

Jeong-Bon Kim

City University of Hong Kong ( email )

Department of Accountancy
83 Tat Chee Avenue
Kowloon Tong
Hong Kong
852-3442-7909 (Phone)

TieMei Li (Contact Author)

University of Ottawa - School of Management ( email )

136 Jean-Jacques Lussier Street
Ottawa, Ontario K1N 6N5
Canada

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
8
Abstract Views
129
PlumX Metrics