Abstract

https://ssrn.com/abstract=2419573
 


 



Tax Havens and Disclosure Aggregation


Herita T. Akamah


University of Nebraska at Lincoln - School of Accountancy

Ole-Kristian Hope


University of Toronto - Rotman School of Management

Wayne B. Thomas


University of Oklahoma - Michael F. Price College of Business

January 12, 2017

Rotman School of Management Working Paper No. 2419573

Abstract:     
Multinational firms’ ability to avoid taxes by shifting profits to low-tax geographic areas is often severely criticized by politicians, regulators (both domestic and foreign), and citizen groups. In this study, we are interested in how firms’ operations in tax havens affect their geographic disclosures. We match the country of each foreign subsidiary listed in Exhibit 21 of the firm’s Form 10-K to its aggregation level (e.g., country, region, continent, etc.) in the geographic disclosures of the segment note. We find that firms with tax havens have more aggregated geographic disclosures. The results are consistent with managers attempting to make less transparent their tax avoidance activities by providing more aggregated geographic disclosures. We further find that the association between tax-haven operations and geographic disclosure aggregation is more severe for larger firms (i.e., firms with higher political costs) and for firms in natural-resources industries, in retail industries, or with low competition. This study offers evidence relevant to financial reporting policy makers and others who are interested in the extent to which financial reporting helps to make multinational firms’ tax activities more transparent.

Number of Pages in PDF File: 44

Keywords: Tax havens, aggregation, disclosure quality, tax avoidance, segment disclosure, Exhibit 21

JEL Classification: H25, H26, F23, F30, M41, G30


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Date posted: April 4, 2014 ; Last revised: January 14, 2017

Suggested Citation

Akamah, Herita T. and Hope, Ole-Kristian and Thomas, Wayne B., Tax Havens and Disclosure Aggregation (January 12, 2017). Rotman School of Management Working Paper No. 2419573. Available at SSRN: https://ssrn.com/abstract=2419573 or http://dx.doi.org/10.2139/ssrn.2419573

Contact Information

Herita T. Akamah (Contact Author)
University of Nebraska at Lincoln - School of Accountancy ( email )
307 College of Business Administration
Lincoln, NE 68588-0488
United States
Ole-Kristian Hope
University of Toronto - Rotman School of Management ( email )
105 St. George Street
Toronto, Ontario M5S 3E6
Canada
HOME PAGE: http://www.rotman.utoronto.ca/FacultyAndResearch/Faculty/FacultyBios/Hope.aspx

Wayne B. Thomas
University of Oklahoma - Michael F. Price College of Business ( email )
Michael F. Price College of Business,
307 W Brooks, Rm 212B
Norman, OK 73019
United States
405-325-5789 (Phone)
405-325-7348 (Fax)
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