Tax havens: Heaven or hell?
On Thursday 17 October 2019 Aija Rusina will hold a trial lecture on a prescribed topic and defend her thesis for the PhD degree at NHH.
Prescribed topic for the trial lecture:
Tax havens: Heaven or hell? A shareholder perspective
Trial lecture:
10:15 in Karl Borch Aud., NHH
Title of the thesis:
Essays on multinational firm behaviour: Profit shifting, secrecy jurisdictions and stock value?
Summary:
This thesis examines multinational firms' profit shifting, with a focus on secrecy aspect of tax havens, stock market evaluation of firms' engagement in tax avoidance and policies to limit profit shifting.
The first chapter examines investor reaction to news on firms' decisions to acquire affiliates located in secrecy havens. The analysis shows that acquisitions of affiliates in secrecy havens affect share prices negatively. For an average S&P 500 firm, acquisition of a secrecy haven affiliate erases $685 million in firm’s market capitalization. The market reaction is less negative, if the acquirer firm is more tax aggressive and if the secrecy haven has a low corporate tax rate.
The second chapter studies publication of the European Union (EU) tax haven blacklist on December 5, 2017 to examine how the use of tax havens affects firm value. The analysis shows that tax haven naming and shaming by the EU was associated with a negative stock price reaction of firms with tax haven subsidiaries. Publication of the blacklist erased $56 billion in market capitalization among the implicated firms. The largest reaction was for those tax havens, for which it was not foreseeable that they would be included in the blacklist. More tax aggressive firms faced more negative returns, which suggests that investors expect firms might be audited or fined for past or overly aggressive tax avoidance.
The third chapter studies how a multinational firm’s choice to centralize or decentralize its decision structure affects profit-shifting incentives under a destination-based cash-flow tax (DBCFT) system. When decisions are centralized and the DBCFT is universally adopted, profit-shifting incentives vanish. If a single country adopts the DBCFT and decisions are centralized, profits are shifted to the adopting country. When there are strategic reasons to decentralize decisions, profit-shifting incentives exist both under universal and unilateral adoption.
Defense:
12:15 in Jebsen Centre, NHH
Members of the evaluation committee:
Associate Professor Franciso Santos (leader of the committee), Department of Finance, NHH
Senior Advisor, Svein Olav Krakstad, The Norwegian Tax Administration
Senior Researcher Andrea Schneider, University of Münster
Supervisors:
Professor Guttorm Schjelderup (main supervisor), Department of Business and Management Science and Norwegian Centre for Taxation, NHH
Professor Jarle Møen, Department of Business and Management Science and Norwegian Centre for Taxation, NHH
Associate Professor Jennifer Blouin, University of Pennsylvania