Internal Information Quality and Tax-Motivated Income Shifting

Posted: 2 Nov 2017

See all articles by Sean T. McGuire

Sean T. McGuire

Texas A&M University - Department of Accounting

Scott G. Rane

University of Florida - Warrington College of Business Administration; Texas A&M University - Department of Accounting

Connie D. Weaver

Texas A&M University - Department of Accounting

Date Written: October 30, 2017

Abstract

This study examines whether the quality of a firm's internal information environment influences its tax-motivated income shifting activities. Although income shifting is an important tax planning strategy, evidence regarding its determinants is limited. We find that higher IIQ is associated with greater tax-motivated income shifting, which suggests that higher IIQ enables managers to better identify and execute income shifting opportunities. We find that the influence of IIQ on tax-motivated income shifting varies with firm characteristics. Specifically, we find that higher IIQ is associated with tax-motivated income shifting for firms with greater uncertainty and greater coordination needs. Overall, these results suggest that the improved information obtained through higher quality internal information environments allows managers to increase tax-motivated income shifting.

Keywords: Tax-motivated income shifting, Transfer pricing, Internal information quality, Tax avoidance, International taxation

Suggested Citation

McGuire, Sean T. and Rane, Scott G. and Weaver, Connie D., Internal Information Quality and Tax-Motivated Income Shifting (October 30, 2017). Forthcoming, Journal of American Taxation Association, https://doi.org/10.2308/atax-51959. Available at SSRN: https://ssrn.com/abstract=3062247

Sean T. McGuire

Texas A&M University - Department of Accounting ( email )

430 Wehner
College Station, TX 77843-4353
United States

Scott G. Rane (Contact Author)

University of Florida - Warrington College of Business Administration ( email )

Gainesville, FL 32611
United States

Texas A&M University - Department of Accounting ( email )

430 Wehner
College Station, TX 77843-4353
United States

Connie D. Weaver

Texas A&M University - Department of Accounting ( email )

430 Wehner
College Station, TX 77843-4353
United States

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