The use of tax havens by multinational enterprises in business clusters: A cross-country and firm-level analysis

Luong, Ha Phuong and Jones, Chris Michael and Temouri, Yama (2021) The use of tax havens by multinational enterprises in business clusters: A cross-country and firm-level analysis. Academy of Management, 2021 (1). ISSN 0065-0668

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Abstract

This paper examines the use of tax havens by MNEs located in business clusters versus their non-cluster counterparts. We extend knowledge-based theory to construct a number of empirical hypotheses that are tested using dichotomous choice models. The firm-level dataset covers 21,389 MNEs from 5 OECD countries during the years 2009-2017. We find evidence that MNEs who are part of a business cluster have 14.9 percent to 23.7 percent higher likelihood of engaging in tax haven activity compared to MNEs who are not part of a business cluster. This association continues to hold whilst controlling for other important factors that drive tax haven FDI. Additional insights suggest that technological sophistication and firm size can impact the magnitude of the correlation between MNEs in business clusters and their tax haven activity. The findings of this paper shed more light on the use of tax havens among MNEs, and hold theoretical and managerial relevance.

Item Type:	Article
Identification Number:	https://doi.org/10.5465/AMBPP.2021.14769abstract
Dates:	Date Event 26 January 2021 Submitted 26 March 2021 Accepted 26 June 2021 Published Online
Subjects:	CAH17 - business and management > CAH17-01 - business and management > CAH17-01-02 - business studies
Divisions:	Faculty of Business, Law and Social Sciences > Birmingham City Business School > Centre for Applied Finance and Economics
Depositing User:	Haphuong Luong
Date Deposited:	12 Nov 2021 16:51
Last Modified:	26 Jun 2022 03:00
URI:	https://www.open-access.bcu.ac.uk/id/eprint/12409

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