
doi: 10.2139/ssrn.3532367
This study examines strategic alliances as channels for tax knowledge diffusion between firms. Although strategic alliances are primarily expected to foster their main business purposes, we investigate whether tax knowledge diffuses as a second-order effect of peer-to-peer cooperation. To tease out the diffusion of tax knowledge, we analyze changes in the tax planning behavior of high-tax firms in strategic alliances with low-tax firms in comparison to high-tax firms in strategic alliances with other high-tax firms. We gain insights into the business purpose of the strategic alliances by applying textual analysis of the deal descriptions. Our results suggest an economically meaningful decrease in cash effective tax rates of high-tax firms in strategic alliances with low-tax firms relative to high-tax firms in high-tax strategic alliances. We find that the adjustment occurs on average not before the second year after a strategic alliance’s initiation. We conjecture that strategic alliances are not intended to establish tax planning investments. We triangulate our findings with regard to effects on textual sentiment of annual reports and tax haven operations. Finally, we show that partner characteristics serve as a substitute rather than as a complement for strategic alliances to low-tax firms. Overall, our results provide robust evidence for tax knowledge diffusion via strategic alliances.
| selected citations These citations are derived from selected sources. This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically). | 1 | |
| popularity This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network. | Average | |
| influence This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically). | Average | |
| impulse This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network. | Average |
