The Effects of Stock Holdings and Trading by Tax Haven Investors (조세피난처 투자자가 투자 기업 및 주식시장에 미치는 영향)

정호성; Soonho Kim (김순호)

doi:10.23842/jif.2017.28.1.004

The Effects of Stock Holdings and Trading by Tax Haven Investors

Journal of Insurance and Finance
2017, 28(1), pp.97-134
DOI : 10.23842/jif.2017.28.1.004
Publisher : Korea Insurance Research Institute
Research Area : Social Science > Business Management
Received : January 10, 2017
Accepted : February 13, 2017
Published : February 28, 2017

정호성 ¹, Soonho Kim ²

¹한국은행 경제연구원
²부경대학교

Accredited

ABSTRACT

This study examines the effect of stock holdings and trading by investors from offshore tax havens (hereafter, tax haven investors) on their target firms and the Korean stock market. This study identifies how tax haven investors’ holdings affect target firms in terms of firm value, corporate governance, dividends, R&D investment, liquidity, information efficiency, and idiosyncratic risk. Moreover, this study investigates the effect on tax haven investors’ trading on liquidity and volatility in the Korean stock market, by focusing on total trading volume, gross buy volume, gross sell volume, and net buy volume. The main findings of this study are threefold. First, target firms show a different pattern of value changes subsequent to block acquisition announcements by tax haven investors than to those by domestic or other foreign investors. Second, we find that while tax haven investors' shareholding deteriorates target firms' corporate governance, it has a positive influence on information efficiency. We do not find a significant impact on tax haven investors' ownership on dividends, R&D investments stock liquidity, or idiosyncratic risks. Third, tax haven investors’ trading exacerbates liquidity in the Korean stock market and increases stock return volatility. Based on these findings, this study suggests that regulatory authorities should continue monitoring existing policies to prevent the above-mentioned negative influences of tax haven investors in the Korean stock market.

KEYWORDS

tax heaven investors, firm value, corporate governance, liquidity, volatility

Citation status

* References for papers published after 2023 are currently being built.

[journal] 강신애 / 2012 / The Impact of Foreign Block Investors and Information Asymmetry on R&D Investment / 국제경영리뷰 / 한국국제경영관리학회 16(4) : 127~147

[journal] 박경서 / 2006 / The role of foreign investors on the management and corporate governance of Korean companies / 금융연구 / 한국금융연구원 20(2) : 73~114

[journal] 박준우 / 2011 / The Impact of Foreign Investor on Korea Firm’s Performance and Value / 기업경영연구 / 한국기업경영학회 18(2) : 203~215

[journal] 설원식 / 2007 / Market Response on Foreign Investor's Announcement of Participation in Management / 국제경영리뷰 / 한국국제경영관리학회 11(4) : 105~132

[journal] 양철원 / 2015 / The Impact of Capital Flows from Tax Havens on the Korean Stock Market / 재무연구 / 한국재무학회 28(2) : 195~234

[journal] 오대혁 / 2014 / The Effects of Foreign Investor on the Korean Firms / 경영컨설팅연구 / 한국경영컨설팅학회 14(2) : 405~423

[journal] 한영영 / 2012 / A Study on the Effect of Foreign Investors on Dividend Policy(The Case of KOSPI Firms) / 경영컨설팅연구 / 한국경영컨설팅학회 12(2) : 107~132

[journal] Amihud, Y. / 2002 / Illiquidity and Stock Returns: Cross-section and Time-series Effects / Journal of Financial Markets 5(1) : 31~56

[journal] Choe, H. / 1997 / Do Foreign Investors Destabilize Stock Markets? The Korean Experience in 1997 / Journal of Financial Economics 54(2) : 227~264

[journal] Dharmapala, D. / 2009 / Which Countries Become Tax Havens? / Journal of Public Economics 93(9) : 1058~1068

[book] Diamond, W. H. / 2002 / Tax Havens of the World / Matthew Bender Books

[journal] Goyenko, R. Y. / 2009 / Do Liquidity Measures Measure Liquidity? / Journal of Financial Economics 92(2) : 153~181

[journal] Hines, James R. / 1994 / Fiscal paradise: Foreign tax havens and American business / Quarterly Journal of Economics 109(1) : 149~182

[journal] Hoi, C. K. / 2013 / Is corporate social responsibility(CSR) associated with tax avoidance? Evidence from irresponsible CSR activities / The Accounting Review 88(6) : 2025~2059

[journal] Lii, Y.S. / 2012 / Doing right leads to doing well: When the type of CSR and reputation interact to affect consumer evaluations of the firm / Journal of business ethics 105(1) : 69~81

[journal] Lo, A. W. / 1988 / Stock Market Prices Do Not Follow Random Walks: Evidence from a Simple Specification Test / Review of Financial Studies 1(1) : 41~66

[report] Margolis, J. D. / 2009 / Does it pay to be good... and does it matter? A meta-analysis of the relationship between corporate social and financial performance / Harvard University

[journal] Orlitzky, M. / 2003 / Corporate social and financial performance: A meta-analysis / Organization studies 24(3) : 403~441

[journal] Petersen, M. A. / 2009 / Estimating Standard Errors in Finance Panel Data Sets: Comparing Approaches / Review of financial studies 22(1) : 435~480

[journal] Richards, A. / 2005 / Big Fish in Small Ponds: The Trading Behavior and Price Impact of Foreign Investors in Asian Emerging Equity Markets / Journal of Financial and Quantitative Analysis 40(1) : 1~27

[journal] Servaes, H. / 2013 / The impact of corporate social responsibility on firm value: The role of customer awareness / Management Science 59(5) : 1045~1061

This paper was written with support from the National Research Foundation of Korea.

KJCKorea
Journal Central

Journal of Insurance and Finance 2023 KCI Impact Factor : 0.59

The Effects of Stock Holdings and Trading by Tax Haven Investors

ABSTRACT

KEYWORDS

Citation status

* References for papers published after 2023 are currently being built.

Journal of Insurance and Finance 2023 KCI Impact Factor : 0.59

The Effects of Stock Holdings and Trading by Tax Haven Investors

ABSTRACT

KEYWORDS

Statistics

Tools

Issue List

Citation status

KCI Citation Counts (1)

REFERENCES (21) * References for papers published after 2023 are currently being built.

Search PDF

Citation

* References for papers published after 2023 are currently being built.