High ownership concentration and income shifting in multinational groups

Purpose Prior literature shows that income shifting is widely performed by multinational groups, but no research as yet has studied alignment between controlling and minority interests on tax avoidance in groups with high ownership concentration. This study aims to analyze the effect of concentration cross-jurisdictional tax-motivated shifting. Design/methodology/approach To test hypotheses, this focuses European groups. Data are collected parent firms each subsidiary. The model considers natural logarithm profit before incentive. Findings show subsidiaries shift for purposes. shareholders’ leads higher levels through subsidiaries’ infra-group transactions. High decreases influence allows company shareholders choose a strategy more freely. Practical implications results suggest taxation need be harmonized reduce incentive governments their statutory rate, profits inwards outward flow. Without international coordination, approach may lead unevenness legislative frameworks around world, bring significant disadvantages some countries, influencing economic growth business development. Originality/value extends prior findings showing method stronger means managers have benefits favor company’s against interests.