Banking Market Consolidation and Tax Planning Intermediation: Evidence from Tax Haven Operations of Client Firms

Jeong Bon KIM, Yupeng LIN, Ying MAO

Research output: Other Conference ContributionsConference Paper (other)Other Conference Paperpeer-review

Abstract

In this study, we utilize the setting of bank M&As to examine banks’ role in tax planning intermediation through helping their clients establish offshore tax haven operations. After a bank M&A, the clients of the target bank “involuntarily” switch to a significantly larger relationship bank (the acquiring bank) with greater global presence and more expertise in structuring complex financial transactions, which allows those clients to receive better tax planning services. As a result, we find that after bank M&As, the clients of target banks experience significant increase in tax haven operations. The increase in tax haven operations is more pronounced when the acquiring bank is a universal bank and when the acquiring bank’s clients engage more in tax haven operations. Furthermore, we provide direct evidence that after bank M&As, the clients of target firms expand their operations into new tax haven countries where the acquiring banks’ pre-existing clients have operations.
Original languageEnglish
Publication statusPublished - 1 Jun 2019
Event2019 Canadian Academic Accounting Association Annual Conference : Mind the GA(A)P - Ottawa, Canada
Duration: 30 May 20191 Jun 2019
https://www.caaa.ca/news-and-events/mind-the-ga-a-p-caaa-annual-conference-2019/

Conference

Conference2019 Canadian Academic Accounting Association Annual Conference
Abbreviated title2019 CAAA
CountryCanada
CityOttawa
Period30/05/191/06/19
Internet address

Fingerprint

Intermediation
Consolidation
Banking
Tax havens
Tax planning
Expertise
Universal banks
Bank relationships

Cite this

KIM, J. B., LIN, Y., & MAO, Y. (2019). Banking Market Consolidation and Tax Planning Intermediation: Evidence from Tax Haven Operations of Client Firms. Paper presented at 2019 Canadian Academic Accounting Association Annual Conference , Ottawa, Canada.
KIM, Jeong Bon ; LIN, Yupeng ; MAO, Ying. / Banking Market Consolidation and Tax Planning Intermediation: Evidence from Tax Haven Operations of Client Firms. Paper presented at 2019 Canadian Academic Accounting Association Annual Conference , Ottawa, Canada.
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KIM, JB, LIN, Y & MAO, Y 2019, 'Banking Market Consolidation and Tax Planning Intermediation: Evidence from Tax Haven Operations of Client Firms' Paper presented at 2019 Canadian Academic Accounting Association Annual Conference , Ottawa, Canada, 30/05/19 - 1/06/19, .

Banking Market Consolidation and Tax Planning Intermediation: Evidence from Tax Haven Operations of Client Firms. / KIM, Jeong Bon; LIN, Yupeng; MAO, Ying.

2019. Paper presented at 2019 Canadian Academic Accounting Association Annual Conference , Ottawa, Canada.

Research output: Other Conference ContributionsConference Paper (other)Other Conference Paperpeer-review

TY - CONF

T1 - Banking Market Consolidation and Tax Planning Intermediation: Evidence from Tax Haven Operations of Client Firms

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AU - LIN, Yupeng

AU - MAO, Ying

PY - 2019/6/1

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N2 - In this study, we utilize the setting of bank M&As to examine banks’ role in tax planning intermediation through helping their clients establish offshore tax haven operations. After a bank M&A, the clients of the target bank “involuntarily” switch to a significantly larger relationship bank (the acquiring bank) with greater global presence and more expertise in structuring complex financial transactions, which allows those clients to receive better tax planning services. As a result, we find that after bank M&As, the clients of target banks experience significant increase in tax haven operations. The increase in tax haven operations is more pronounced when the acquiring bank is a universal bank and when the acquiring bank’s clients engage more in tax haven operations. Furthermore, we provide direct evidence that after bank M&As, the clients of target firms expand their operations into new tax haven countries where the acquiring banks’ pre-existing clients have operations.

AB - In this study, we utilize the setting of bank M&As to examine banks’ role in tax planning intermediation through helping their clients establish offshore tax haven operations. After a bank M&A, the clients of the target bank “involuntarily” switch to a significantly larger relationship bank (the acquiring bank) with greater global presence and more expertise in structuring complex financial transactions, which allows those clients to receive better tax planning services. As a result, we find that after bank M&As, the clients of target banks experience significant increase in tax haven operations. The increase in tax haven operations is more pronounced when the acquiring bank is a universal bank and when the acquiring bank’s clients engage more in tax haven operations. Furthermore, we provide direct evidence that after bank M&As, the clients of target firms expand their operations into new tax haven countries where the acquiring banks’ pre-existing clients have operations.

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KIM JB, LIN Y, MAO Y. Banking Market Consolidation and Tax Planning Intermediation: Evidence from Tax Haven Operations of Client Firms. 2019. Paper presented at 2019 Canadian Academic Accounting Association Annual Conference , Ottawa, Canada.