Does the OECD have

Abstract

In February 2013, the OECD introduced its Base Erosion and Profit Shifting Project. This study investigates whether there is a market reaction on key event dates throughout the development of the BEPS project. The OECD has no regulatory power and analysts have doubted whether it will change the global corporate taxation structure or even lead to an increase in corporate taxation for multinational corporations. However, major accounting firms have published advice on how to comply with changes required by the BEPS Action Plan. I examine the three-day cumulative abnormal return for different categories of firms that may be disproportionately affected by changes brought about by the BEPS Project. I find the expected negative market reaction on several of the key event dates, indicating investors believe the OECD's plan will be implemented.