Transnational Debt Shifting of Chinese Multinational Companies

ABSTRACT Using data from domestic listed companies, this paper provides evidence of transnational debt shifting of Chinese multinational companies due to corporate tax differences, and finds that the anti‐avoidance rule introduced in China in 2017 has not effectively curbed such behavior. Moreover, the debt shifting activities are predominantly observed in multinational companies with subsidiaries in tax havens, and are particularly driven by these offshore entities.