Tax Consolidation And The Structure Of Corporate Groups: Evidence From The Japanese Tax Reform 2002
AbstractA consolidated filing of corporate income tax may induce firms to manipulate ownership interests in subsidiaries but no study has systematically examined such behavioral responses. This paper examines empirically inclusions/exclusions of subsidiaries to/from consolidation groups in a quasi-experiment that utilizes the Japanese tax reform of 2002. The identification of tax effects is based on a difference-in-difference strategy that exploits disincentives to consolidate subsidiaries with losses carried forward. The data consists of 37,000-40,000 subsidiary-time observations spanning biennially over 1988-2006. The result shows that losses carried forward significantly reduced the propensity to include subsidiaries to consolidation groups. No evidence on tax-motivated exclusion is found. This result suggests that the forced consolidation regime is preferable.
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Bibliographic InfoPaper provided by Australia-Japan Research Centre, Crawford School of Public Policy, The Australian National University in its series Asia Pacific Economic Papers with number 394.
Length: 50 pages
Date of creation: 2011
Date of revision:
Find related papers by JEL classification:
- G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
- H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
- K34 - Law and Economics - - Other Substantive Areas of Law - - - Tax Law
This paper has been announced in the following NEP Reports:
- NEP-ACC-2011-11-21 (Accounting & Auditing)
- NEP-ALL-2011-11-21 (All new papers)
- NEP-PBE-2011-11-21 (Public Economics)
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- Crawford School Working Papers in December 2011
by David Stern in Stochastic Trend on 2012-01-03 00:04:00
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