Intra-Industry Spillovers of Profit Shifting and Tax Haven FDIs

35 Pages Posted: 6 Apr 2021 Last revised: 15 Nov 2023

See all articles by Baptiste Souillard

Baptiste Souillard

Université Libre de Bruxelles (ULB) - European Center for Advanced Research in Economics and Statistics (ECARES)

Date Written: March 2, 2021

Abstract

Do firms replicate the tax avoidance schemes of their peers? The present paper provides systematic evidence along these lines. An event study shows that a US-listed enterprise is more likely to enter a specific tax haven if another US-listed enterprise operating in the same sector already owns subsidiaries in that tax haven. The inclusion of three-way fixed effects, the absence of pre-trends, and several robustness checks consolidate the results. Moreover, profit shifting spillovers vary over time, across sectors, and by tax haven. The findings suggest that aggressive tax planning strategies spread within industries and carry policy implications.

Keywords: Multinational enterprises, profit shifting, tax havens, foreign direct investments, spillovers

JEL Classification: F23, H26, L25, M21

Suggested Citation

Souillard, Baptiste, Intra-Industry Spillovers of Profit Shifting and Tax Haven FDIs (March 2, 2021). Available at SSRN: https://ssrn.com/abstract=3796015 or http://dx.doi.org/10.2139/ssrn.3796015

Baptiste Souillard (Contact Author)

Université Libre de Bruxelles (ULB) - European Center for Advanced Research in Economics and Statistics (ECARES) ( email )

Ave. Franklin D Roosevelt, 50 - C.P. 114
Brussels, B-1050
Belgium

HOME PAGE: http://www.baptistesouillard.com/

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