Publication Type

Working Paper

Version

publishedVersion

Publication Date

8-2018

Abstract

We investigate the diffusion of tax planning across firms, and the real effects and sharing of benefits from such diffusion. Using supply chain relationships among firms as a possible diffusion channel, we find that tax planning spreads from principal customers to their dependent suppliers. We find that tax planning diffusion has real effects on product markets and that both parties to the tax planning diffusion share in the benefits. As tax planning diffuses to suppliers, suppliers share the tax savings with their customers by reducing the mark-up on their products. Finally, we show that tax planning diffusion is more pronounced when the customer and the supplier share a common external auditor and when they are located in the same state, suggesting that these diffusion channels complement one another.

Keywords

tax planning, diffusion, real effects, product markets, supply chains

Discipline

Accounting

Research Areas

Corporate Reporting and Disclosure

First Page

1

Last Page

40

Publisher

SSRN

Included in

Accounting Commons

Share

COinS