Public Disclosure of Foreign Subsidiaries and International Tax Avoidance
37 Pages Posted: 7 Aug 2015 Last revised: 5 Nov 2016
Date Written: October 2016
Our study analyzes the relationship between public disclosure of group structures in Exhibit 21 and international tax avoidance of U.S. multinational firms. Several U.S. multinational enterprises have removed a substantial number of foreign subsidiaries from their Exhibit 21 since 2010. Our analysis suggests that firms that decided to substantially reduce the number of foreign subsidiaries disclosed in their Exhibit 21 avoid significantly more taxes compared to firms that did not change disclosure.
Keywords: Effective Tax Rate, Tax Avoidance, Public Disclosure
JEL Classification: M41, M48, H26
Suggested Citation: Suggested Citation