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Introduction of this Edition
The following is a brief introduction to each article published in this edition. The
first article of this edition titled “The Financial Statement Comparability of Listed Foreign
Firms in Taiwan: The Effect of Board Interlocks and Financial Statement Fraud” by Tsai
and Li investigates the differences in the financial statement comparability of listed foreign
firms in Taiwan (KY companies) and that of non-KY companies before and after the event
of Pharmally scandal. The results show that in general, the comparability regarding KY is
worse than that of the non-KY companies, and the comparability of non-KY companies
with board interlocks to KY companies is worse than those without board interlocks; after
the case of Pharmally scandal, the comparability of non-KY companies has improved
regardless of what their board interlocks status are. Nonetheless, the comparability of KY
companies has not improved and has even deteriorated, possibly due to COVID-19, which
prevents auditors from conducting on-site audits.
The second article titled “Utilizing Business Process Management (BPM) for
Performance Improvement: A Case Study of an Express Company in Taiwan” by Lo and
Chang explores whether and how the Plan-Do-Check-Act (PDCA) life cycle, a framework
which is proposed by business process management (BPM) researchers, can be applied to
the support process of the express industry. They adopt the case study method and utilize
the PDCA life cycle to the hiring process—previously being considered as a backend
support process—of the Taiwan subsidiary of a multinational express company. They
find that the application of the life cycle significantly improves the recruitment process
time and the rates of damaged reports and rejected offers. Overall, by focusing on the
application of BPM in support process, their study expands the scope of BPM study where
most past studies are limited to the primary process.
The third article titled “The Effects of Economic Substance Act on Offshore
Investment Structures and Tax Avoidance” by Chen, Wang, and Tsai explores the effects of
the Economic Substance Act, introduced by several tax havens since 2019, on the offshore
investment structures and tax avoidance behaviors of TWSE listed and TPEx companies
(2016-2021). The sample period allows for the analysis of corporate tax avoidance
behaviors before and after the enactment of the Economic Substance Act. The study
employs three regression models, and the results indicate that the Economic Substance
Act has discouraged companies from establishing subsidiaries in tax havens, with existing
subsidiaries in such jurisdictions being more likely to be liquidated or relocated to non-
tax haven areas. Moreover, the act has also led to reductions in the maximum number