A reexamination of investors' reaction to tax shelter news: Evidence from the Luxembourg tax leaks

被引:4
作者
Nesbitt, Wayne L. [1 ,3 ]
Outslay, Edmund [1 ]
Persson, Anh V. [2 ]
机构
[1] Michigan State Univ, Broad Coll Business, 632 Bogue St, E Lansing, MI 48824 USA
[2] Univ Illinois, Gies Coll Business, 1206 S 6th St, Champaign, IL 61820 USA
[3] 632 Bogue St N261, E Lansing, MI 48824 USA
关键词
Luxembourg tax leaks; Tax uncertainty; Tax rulings; Event study; AVOIDANCE; INCENTIVES; BENEFITS; COSTS;
D O I
10.1016/j.jacceco.2022.101537
中图分类号
F8 [财政、金融];
学科分类号
0202 ;
摘要
This study examines the stock market reaction to the unprecedented leaks of confidential advance tax rulings between Luxembourg and multinational corporations-also known as the "LuxLeaks." Contrary to the negative market reaction to tax shelter news documented in prior research, we find that investors responded positively to these leaks. This reaction is concentrated among U.S. firms. Furthermore, we document a positive association between abnormal returns and the reduction in firms' tax uncertainty, consistent with a downward revision in investors' perception of the tax uncertainty associated with the firms' Luxembourg operations. We also investigate other firm characteristics and find that, among U.S. firms, investors' reaction is weaker for those over-invested in tax avoidance. Among non-U.S. firms, the market response is muted by concerns about the quality of governance. In summary, our results suggest that investors' reaction to tax shelter news is conditional on their reassessment of the firms' tax uncertainty.(c) 2022 Elsevier B.V. All rights reserved.
引用
收藏
页数:19
相关论文
共 50 条
[41]   Limits of tax regulation: Evidence from strategic R&D classification and the R&D tax credit [J].
Laplante, Stacie K. ;
Skaife, Hollis A. ;
Swenson, Laura A. ;
Wangerin, Daniel D. .
JOURNAL OF ACCOUNTING AND PUBLIC POLICY, 2019, 38 (02) :89-105
[42]   The influence of tax authorities on the employment of tax practitioners: Empirical evidence from a survey and interview study [J].
Frecknall-Hughes, Jane ;
Gangl, Katharina ;
Hofmann, Eva ;
Hartl, Barbara ;
Kirchler, Erich .
JOURNAL OF ECONOMIC PSYCHOLOGY, 2023, 97
[43]   Is tax aggressiveness associated with tax litigation risk? Evidence from D&O Insurance [J].
Dain C. Donelson ;
Jennifer L. Glenn ;
Christopher G. Yust .
Review of Accounting Studies, 2022, 27 :519-569
[44]   Does VAT have higher tax compliance than a turnover tax? Evidence from China [J].
Li, Jianjun ;
Wang, Xuan .
INTERNATIONAL TAX AND PUBLIC FINANCE, 2020, 27 (02) :280-311
[45]   Does mandatory tax disclosure mitigate tax expense anomaly? Evidence from FIN 48 [J].
Song, Huimin ;
Tao, Xuedan ;
Wang, Huabing ;
Zhang, Jinkang ;
Zhang, Linlin .
FINANCE RESEARCH LETTERS, 2024, 59
[46]   Labor protection, tax planning, and capital investment: evidence from small-sized enterprises [J].
De Vito, Antonio .
APPLIED ECONOMICS LETTERS, 2024, 31 (04) :330-337
[47]   Banking liberalization and corporate tax planning: Evidence from natural experiments [J].
Chen, Shenglan ;
Ma, Hui ;
Teng, Haimeng ;
Wu, Qiang .
JOURNAL OF CORPORATE FINANCE, 2022, 76
[48]   Impact of executive compensation on corporate tax aggressiveness: evidence from India [J].
Gill, Suveera ;
Arora, Taruntej Singh .
MANAGERIAL FINANCE, 2022, 48 (06) :833-852
[49]   Name and shame? Evidence from the European Union tax haven blacklist [J].
Rusina, Aija .
INTERNATIONAL TAX AND PUBLIC FINANCE, 2020, 27 (06) :1364-1424
[50]   Local government debt and corporate tax avoidance: Evidence from China [J].
Shen, Zhihan ;
Zhang, Ruipeng ;
Li, Peigong .
INTERNATIONAL REVIEW OF ECONOMICS & FINANCE, 2024, 93 :985-1000