Group subsidiaries, tax minimization and offshore financial centres: Mapping organizational structures to establish the ‘in-betweener’ advantage

International business and public policy research have examined the techniques that multinational enterprises (MNEs) use to shift revenues to subsidiaries in offshore financial centres (OFCs) in order to minimize tax liability and arbitrage for their advantage. While study of such tax arbitrage strategies has looked to geographical locations and legal dimensions to better understand these strategies, it has ignored the structural and organizational relationship between MNEs and their subsidiaries. We define two distinct types of OFC-based corporate entities based on their location among and apparent control over other MNE affiliates: ‘stand-alone’ OFCs at the end of a chain of MNE subsidiaries; and ‘in-betweener’ OFCs with equity control over further entities and hence apparent flexibility to redirect profits to other MNE subsidiaries further down the chain. We hypothesize that when MNEs have in-betweener OFCs controlling a substantial share of overall MNE profits, this indicates greater MNE interest in aggressive tax planning (ATP). We then evaluate empirical support for our claims based on an ‘equity mapping’ approach identifying stand-alone and in-betweener OFCs in 100 of the largest MNEs operating globally. This study demonstrates that a key factor determining tax arbitrage is not the amount of value registered on OFC subsidiaries’ balance sheets, but rather the portion of the group’s operating revenues and net income controlled by OFC subsidiaries. National taxing authorities could benefit from tracking in-betweener OFC locations and behaviour to counter ATP strategies, decrease sovereign arbitrage, and increase MNE tax revenue

Regulation and the Evolution of the Financial Services Industry

This paper provides a foundation for evaluating recent changes in regulatory design in light of the increasingly competitive and dynamic environment of banking. Intrusive, controloriented direct and indirect approaches to regulation have become very costly. Regulation that focuses on setting minimum requirements will become dominant. Supervision would then primarily aim at verifying compliance. We argue that the viability of this approach requires a well-developed financial system and adequate internal control systems, primarily to align incentives within institutions

Agency problems and governance mechanisms in collaborative communities

The accepted and peer reviewed manuscript to the articleCollaborative communities—where participants collaboratively solve problems and integrate their contributions—are increasingly popular organizational forms in a wide variety of domains. As with any cooperative effort, communities involve differential interests and information asymmetries, creating potential agency problems. I undertake an exploratory multiple-case study of four communities within the domains of enterprise information technology, sustainable products and services, drug discovery, and digital marketing and communication. I find that agency relationships in the collaborative communities are characterized by three distinct multiple-agency structures: commons, team production, and brokering. These are governed by four main categories of mechanism: (1) mutual monitoring, enabling self-regulation and peer-based control; (2) membership restrictions, regulating admission to the community; (3) values and rules, guiding member action and collaboration; and (4) property rights and incentives, regulating rights to community resources and distribution of rewards. I also identify contingencies between governance mechanisms and agency problems.1, Forfatterversjo

New Evidence on the Determinants of Bank Risk

Commercial banks, risk, transparency, volatility,