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
Citation
CEN, Ling; MAYDEW, Edward; ZHANG, Liandong; and ZUO, Luo.
Tax planning diffusion, real effects, and sharing of benefits. (2018). 1-40.
Available at: https://ink.library.smu.edu.sg/soa_research/1857
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.