Recently, the co-authored paper "Risk Shifting of Chinese Multinational Enterprises" by Professor Yu Miaojie (President of Liaoning University), Professor Ma Xiangjun (Deputy Director of the China Institute of Economic Research, Liaoning University), and Associate Professor Tian Wei (School of Economics, Peking University) has been officially accepted for publication in *International Tax and Public Finance*, a leading international journal in the field of public finance.

Paper Abstract

Existing literature on the profit shifting activities and strategies of multinational enterprises (MNEs) has primarily focused on developed economies. However, the preferential tax rate systems often implemented in developing countries may significantly affect the profit shifting incentives of MNEs, suggesting that the experiences of developing countries may differ from those of developed countries. This paper examines Chinese MNEs from the world's largest developing country, investigating risk shifting as an implicit profit shifting strategy. The empirical analysis incorporates China's preferential tax rate policies. Risk shifting is a common tactic in transfer pricing planning, whereby MNEs reallocate operational risks between related parties in internal transactions to shift profits to low-tax jurisdictions. The empirical results show that when the tax rate differential between China and a foreign country increases by 10%, the residual risk of the Chinese parent firm decreases by approximately 10% at the mean level. Moreover, risk shifting into China (domestic) is more pronounced than risk shifting out of China (foreign), highlighting the important role of China's preferential tax rate policy system. The results are robust to alternative risk measures (e.g., strategic risk) and different risk measurement approaches. The paper also finds that this risk shifting effect is more pronounced among firms with high levels of intangible assets, inventory, or accounts receivable, as such firms may face higher R&D risk, market risk, inventory risk, and credit risk.

Journal Introduction

International Tax and Public Finance (ITPF) is one of the most influential first-tier international journals in the field of public finance. It focuses on tax and fiscal issues in open economies, as well as policy interactions across different countries and regions and their economic consequences. Since its inception in 1994, the journal has gradually developed into one of the core academic platforms in the fields of international taxation and public finance in open economies.

Authors Profile:

Yu Miaojie is the Deputy Secretary of the Party Committee and President of Liaoning University. He is a Lifetime Fellow of the Royal Economic Society (FREcon), a Fellow of the International Economic Association (IEA) of the United Nations, a Distinguished Professor of the Changjiang Scholars Program, and a recipient of the National Science Fund for Distinguished Young Scholars. He serves as a Deputy to the 14th National People's Congress (NPC) and a Special Supervisor of the National Commission of Supervision. He is also an Associate Editor of The Economic Journal, an internationally top-tier journal in economics. Professor Yu is among the top 1% most highly cited economists in the field of economics and management worldwide, and is the only scholar of Chinese origin to have received the "Royal Economic Society Prize" to date. He is the editor-in-chief of China's Open Economy, a key original textbook in philosophy and social sciences supported by China, and is a recipient of the Special Government Allowance of the State Council.

Ma Xiangjun is Vice Dean, Professor, and Doctoral Supervisor of the China Institute of Economic Research at Liaoning University, and Vice President of the Liaoning Provincial International Taxation Association. She holds a Ph.D. from the University of Virginia. She previously served as an Associate Professor at the University of International Business and Economics (UIBE), a Visiting Scholar at the National School of Development (NSD) of Peking University, a Transfer Pricing Economist/Manager at Deloitte Tax (Silicon Valley Office), and was seconded to the World Trade Organization (WTO) Department of the Ministry of Commerce of China. Her research interests include international trade, multinational enterprises and international taxation, and applied microeconomics. Her work has been published in leading domestic and international academic journals, such as the Journal of International Economics and Economic Research Journal. She has served as a sub-project leader for major projects funded by the National Social Science Fund of China and the National Natural Science Foundation of China (Key Program). She has also led youth projects funded by the National Natural Science Foundation of China and the Beijing Social Science Foundation. She has received the Second Prize and the Best Teaching Plan Award at the Beijing Young Faculty Teaching Skills Competition.

Tian Wei is a tenured associate professor at the School of Economics, Peking University. Her primary research fields include international economics, development economics, and industrial economics. Her work has been published in leading domestic and international journals such as The Economic Journal, Journal of Economic Behavior and Organization, Economic Research Journal, Management World, and The World Economy. Her research achievements have received awards including the An Zijie International Trade Research Award, the Outstanding Achievement Award in Scientific Research from the Ministry of Education of China, and the Liu Shibai Economics Award.