<?xml version="1.0" encoding="UTF-8"?><xml><records><record><source-app name="Biblio" version="7.x">Drupal-Biblio</source-app><ref-type>17</ref-type><contributors><authors><author><style face="normal" font="default" size="100%">Lisa De_Simone</style></author><author><style face="normal" font="default" size="100%">Jeri Seidman</style></author><author><style face="normal" font="default" size="100%">Kenneth Klassen</style></author></authors></contributors><titles><title><style face="normal" font="default" size="100%">Unprofitable affiliates and income shifting behavior</style></title><secondary-title><style face="normal" font="default" size="100%">The Accounting Review</style></secondary-title></titles><dates><year><style  face="normal" font="default" size="100%">Accepted</style></year></dates><language><style face="normal" font="default" size="100%">eng</style></language><abstract><style face="normal" font="default" size="100%">&lt;p&gt;&amp;nbsp;&lt;/p&gt;&lt;p&gt;Income shifting from high-tax to low-tax jurisdictions is considered a primary method of&amp;nbsp;reducing worldwide tax burdens of multinational firms. Current losses also affect incomeshifting&amp;nbsp;incentives. We extend prior approaches by explicitly considering unprofitable affiliates&amp;nbsp;and test whether the association between losses and tax incentives for unprofitable affiliates&amp;nbsp;deviates from the negative association observed in profitable affiliates. Results suggest that&amp;nbsp;multinational firms alter the distribution of reported profits to take advantage of losses. Our point&amp;nbsp;estimate for profitable affiliates implies that an increase of one standard deviation in the tax&amp;nbsp;incentive, &lt;em&gt;C&lt;/em&gt;, of an affiliate with average return on assets of 13.3 is associated with a lower return&amp;nbsp;on assets of 0.5 percentage points. The same change in tax incentive of an unprofitable affiliate is&amp;nbsp;associated with an increase in its return on assets of approximately 0.7 percentage points,&amp;nbsp;holding assets, labor, productivity and other factors constant. We further document a larger&amp;nbsp;responsiveness to tax incentives between profitable and unprofitable affiliates in high-tax&amp;nbsp;jurisdictions, consistent with predictions.&lt;/p&gt;&lt;p&gt;&amp;nbsp;&lt;/p&gt;</style></abstract></record></records></xml>