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Analysis of the relationship between stakeholders and profit shifting
—Evidence in the listed electronics companies on TSE
corporate governance,stakeholders,profit shifting,transfer pricing,financial performance,
|Publication Year :||2016|
2) 合併營業損失與利潤移轉為負相關：合併營業損失發生時，海外子公司為單純營運個體，不負擔額外風險，故應賺取(保留)合理利潤， 因母公司應擔負較多功能，因此將由母公司吸收較多損失，符合功能別定義。
Taiwanese companies have been continuously investing in the Mainland China for more than 20 years. Massive investment usually accompanies with increasing volume of affiliate transactions between groups. So in the recent years, these companies were questioned by the tax offices in two different tax regimes if the policies of transfer pricing for affiliate transactions were properly set. The associated audits were performed intensively and even more heavily. That worst comes to worst would be such audit may lead to double taxation and as a result increases tax cost. Nevertheless, corporate governance is another critical issues as plenty of accounting and business scandals took place and badly damaged firms’ value. The management team of a company cannot but seriously tackle with the issues in order to further protect the stakeholder' interests as well as pursue the best firm value and sustainability of operation.
The study we present doesn't adopt the hypothesis or variables used in the empirical analysis relating to earnings management, corporate governance, stakeholders of firms, and tax effects in light of transfer pricing. Instead, the study aims to examine the relationship between stakeholders and profit shifting by means of the multiple regression method.
The result of empirical analysis presents that there is none correlation between profit shifting and these factors in the aspects of time and stakeholders (the shareholding of the board, duality of CEO, independent directors, institutional investors, and audit quality), respectively. Sum up the finding as follows:
1) The time span of the study crossed over 14 years from 2001 to 2014. No correlation is found when using the foregoing period as independent variables. Thus, it is supposed that the electronics companies in Taiwan do not shift their profits in response to the promulgated tax laws relating to tax avoidance.
2) Consolidated operating loss is negatively correlated with profit shifting: when firms encounter consolidated operating loss, overseas subsidiaries would not bear additional risks due to simple function operation and therefore these subsidiaries should keep reasonable margins at their end. Parent companies accordingly absorb more loss, which apparently conforms to the notion whoever possess more functions, they should carry more risks.
3) The percentage of none-parent company revenue over consolidated revenue is negatively correlated with profit shifting: it indicates Taiwanese companies intend to engage parent companies in part of the business flow, which implies that parent companies would necessarily recognize revenue.
|Appears in Collections:||會計與管理決策組|
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