Document Type
Article
Author ORCID Identifier
Danjue Clancey-Shang https://orcid.org/0000-0001-7191-879X
Journal/Book Title/Conference
Journal of Risk and Financial Management
Volume
17
Issue
3
Publisher
MDPI AG
Publication Date
3-1-2024
Journal Article Version
Version of Record
First Page
1
Last Page
13
Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 License.
Abstract
In this paper, we explore the relationship between the culture of the country where a multinational corporation (MNC) is headquartered and the MNC's stock market reaction to tax avoidance regulations. Specifically, we examine the different responses of MNCs following the implementation of the 2010 UK reform that restricted profit shifting for a specific group of firms. We find that, in countries with short-term-oriented cultures, MNCs affected by this reform experienced positive stock market responses relative to their unaffected counterparts. This is not found in long-term-oriented cultures. This difference in response can partly be explained by the differing perceptions of the role tax havens play in tax minimization practices between more long-term-oriented cultures and those oriented towards the short term. We provide evidence that investors from more future-oriented cultures may recognize the short-lived effectiveness of a regulation ex ante, and thus price the quasi-exogenous market shock differently than their more short-term-oriented counterparts.
Recommended Citation
Bilicka, Katarzyna, Danjue Clancey-Shang, and Yaxuan Qi. 2024. Long-Term Orientation and Tax Avoidance Regulations. Journal of Risk and Financial Management 17: 102. https://doi.org/10.3390/jrfm17030102
