Publication Type
Journal Article
Publication Date
1-2017
Abstract
We investigate whether firms in close customer-supplier relationships are better able to identify and implement tax avoidance strategies via supply chains. Consistent with our prediction, we find that both principal customers and their dependent suppliers avoid more taxes than other firms. Further analysis suggests that principal customers and dependent suppliers likely engage in tax strategies involving shifting profits to tax haven subsidiaries. Moreover, tax benefits appear to explain both principal customer firms’ and dependent supplier firms’ organizational decisions. Overall, our study provides evidence of the importance of tax avoidance as a source of gains from these relationships.
Keywords
Customers, Industrial organization, Suppliers, Supply chain, Tax avoidance
Discipline
Accounting | Corporate Finance
Research Areas
Corporate Reporting and Disclosure
Publication
Journal of Financial Economics
Volume
123
Issue
2
First Page
377
Last Page
394
ISSN
0304-405X
Identifier
10.1016/j.jfineco.2016.09.009
Publisher
Elsevier
Citation
CEN, Ling; MAYDEW, Edward L.; ZHANG, Liandong; and ZUO, Luo.
Customer-supplier relationships and corporate tax avoidance. (2017). Journal of Financial Economics. 123, (2), 377-394.
Available at: https://ink.library.smu.edu.sg/soa_research/1703
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
http://doi.org/10.1016/j.jfineco.2016.09.009