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公司避稅與金字塔結構
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1. Introduction
This study examines whether the number of investment layers within corporate
pyramids can facilitate tax avoidance. The corporate pyramid, with the parent at the top
and successive layers of subsidiaries below, is one frequently used ownership structure to
establish control of the subsidiaries (Hoyle, Schaefer, and Doupnik, 2011; La Porta,
Lopez-De-Silanes, and Shleifer, 1999; Claessens, Djankov, and Lang, 2000; Claessens,
Djankov, Fan, and Lang, 2002). Many firms around the world are organized into pyramid-
like structures (La Porta et al., 1999; Claessens et al., 2000; Claessens et al., 2002; Khanna
and Yafeh, 2005); however, whether corporate pyramid is used to facilitate tax avoidance
is still unknown. Shackelford and Shevlin (2001) point out that insider control and
ownership structure are important but are relatively unexplored. We fill the gap by
examining the impact of corporate pyramidal structure on tax avoidance.
We argue that corporate tax avoidance is positively associated with the number of
layers in corporate pyramids based on two reasons. First, establishing a long chain of
pyramidal layers allows the parent firm to leverage up its control relative to its ownership
of the bottom-layer firm and is a mechanism to preserve private benefits of control for the
ultimate controlling shareholders (e.g., La Porta et al., 1999; La Porta, Lopez-de-Silanes,
Shleifer, and Vishny, 2000; Claessens et al., 2002). While tax avoidance is beneficial to all
investors in terms of greater tax savings, recent literature highlights that tax avoidance
(Desai and Dharmapala, 2006) can be used for rent extraction purposes. Rent extraction
refers to non-value maximizing activities decision makers pursue at the expense of
shareholders, including earnings management and related-party transactions. Desai and
Dharmapala (2006) argue that tax avoidance often comprises very complex transactions or
structures that are designed to obscure the underlying intent and to avoid detection by the
authority. The characteristics can create opportunities for controlling shareholders to
engage in non-value maximization activities. Thus, consistent with the agency perspective
of tax avoidance (e.g., Desai and Dharmapala, 2008; Chen and Chu, 2005; Crocker and
Slemrod, 2005), we argue that the obscure nature of a long pyramid structure may make it
easier for controlling owner to hide rent extraction activities. Since the parent firm usually
moves taxable income within a multinational group from high-tax to low-tax source
countries, the length of corporate pyramid makes it easier for the controlling parent to
conduct some intercompany trading, or other transactions on royalties, rents, and etc.
Although all the shareholders seem to enjoy the benefits of tax avoidance, controlling