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Repatriation Taxes, Internal Agency Conflicts, And Subsidiary-Level Investment Efficiency, Harald J. Amberger, Kevin S. Markle, Daniel M. P. Samuel
Repatriation Taxes, Internal Agency Conflicts, And Subsidiary-Level Investment Efficiency, Harald J. Amberger, Kevin S. Markle, Daniel M. P. Samuel
Research Collection School Of Accountancy
Using a global sample of multinational corporations (MNCs) and their foreign subsidiaries, we find that repatriation taxes impair subsidiary-level investment efficiency. Consistent with internal agency conflicts between the central management of the MNC and the manager of the foreign subsidiary being the driver, we show that this effect is concentrated in subsidiaries with high information asymmetry and in subsidiaries that are weakly monitored. Quasi-natural experiments in the U.K. and Japan establish a causal relationship for our findings and suggest that a repeal of repatriation taxes increases subsidiary-level investment efficiency while reducing the level of investment. Our paper provides timely empirical …
Local Tax Incentives And Behavior Of Foreign Enterprises: Evidence From A Large Developing Country, Jing Xing, Wei Cui, Xi Qi
Local Tax Incentives And Behavior Of Foreign Enterprises: Evidence From A Large Developing Country, Jing Xing, Wei Cui, Xi Qi
Research Collection School Of Accountancy
We analyze how profit reporting and investment behavior of foreign enterprises respond to local tax incentives in China, a large developing country. Using firm-level data between 2000 and 2013 from China’s industrial enterprise survey, we first provide strong evidence for tax competition among Chinese cities (especially cities within the same province) over the average effective income tax rate. We then find that, despite stringent capital controls, both reported pre-tax profits and investment of foreign firms respond strongly to local tax incentives, suggesting that subnational tax competition in China is oriented towards both mobile profits and real resources.
The Real Effect Of The Initial Enforcement Of Insider Trading Laws, Zhihong Chen, Yan Huang, Yuanto Kusnadi, K. C. John Wei
The Real Effect Of The Initial Enforcement Of Insider Trading Laws, Zhihong Chen, Yan Huang, Yuanto Kusnadi, K. C. John Wei
Research Collection School Of Accountancy
Based on a difference-in-differences approach, we find strong evidence that the initial enforcement of insider trading laws improves capital allocation efficiency. The effect is concentrated in developed markets and manifests shortly after the enforcement year. Further analysis shows that the improvement is positively associated with the increase in liquidity around the enforcement year and the opaqueness of the information environment before the enforcement year. The improvement is more pronounced for firms operating in more competitive markets, being more financially constrained, and with more severe agency problems. Finally, we find increased accounting performance after the enforcement and the increase is positively …