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The Influence Of The Connections Of Romanian Non-Listed Firms To Tax Havens On Their Profitability

Author

Listed:
  • Mihai-Bogdan AFRASINEI

    () (Associate Assistant Professor, Alexandru Ioan Cuza University of Iasi, Romania)

  • Iuliana Eugenia GEORGESCU

    () (Professor, Alexandru Ioan Cuza University of Iasi, Romania)

  • Costel ISTRATE

    () (Professor, Alexandru Ioan Cuza University of Iasi, Romania)

Abstract

The offshore entities have become one of the most efficient solutions for tax avoidance and are used by taxpayers almost all around the world. This paper investigates the influence of the connections (via subsidiaries or shareholders) of Romanian non-listed firms to tax havens on their profitability and effective tax rate. In this regard, we used a sample of 7,167 Romanian firms (3,370 with connections to tax havens and 3,797 without tax havens connections). For statistical analysis, we used the simple and multiple linear regression methods with dummy variables. Results have shown that the presence of Romanian non-listed firms in tax havens significantly influences their profitability and effective tax rate. The firms with connections to tax havens have a return on equity ratio higher, a return on assets ratio lower, a gross profit margin ratio lower, a total assets turnover ratio higher and an effective tax rate lower than companies without connections to such jurisdictions

Suggested Citation

  • Mihai-Bogdan AFRASINEI & Iuliana Eugenia GEORGESCU & Costel ISTRATE, 2016. "The Influence Of The Connections Of Romanian Non-Listed Firms To Tax Havens On Their Profitability," CES Working Papers, Centre for European Studies, Alexandru Ioan Cuza University, vol. 8(4), pages 572-596, December.
  • Handle: RePEc:jes:wpaper:y:2016:v:8:i:4:p:572-596
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    tax havens; offshore companies; tax planning; tax optimization; tax avoidance; effective tax rate;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General

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