Differences in the reported performances of foreign-controlled and domestically-controlled firms: Some U.K. evidence

C. R. Emmanuel, P. B. Oyelere

Research output: Contribution to journalArticlepeer-review

5 Citations (Scopus)


This study provides empirical evidence on the relative performances of foreign-controlled domestic companies (FCDCs) operating in the United Kingdom (U.K.) as compared to those of U.K.-controlled domestic companies (UKDCs). One hundred and fifty FCDCs were matched with 150 UKDCs on the bases of size and industry. The reported performance data of the two sub-samples for 5 years were extracted from the FT Extel secured database. Statistical tests were then carried out to establish whether there were significant differences between the two groups of firms. Results revealed statistically significant differences in the reported performances of FCDCs and UKDCs operating in the U.K. over the 5-year period. Foreign-controlled firms significantly under-performed UKDCs of comparable size and industry. The lower profitability figures reported by these firms were partly as a result of higher trading expenses. The study also found differences in the year-to-year magnitude of under-performance by FCDCs. While findings in this study corroborate those of earlier U.S.-based studies, the management and owners of FCDCs' parents should be interested in the apparent under-performance of their U.K.-based assets. It is possible, however, that the figures reported do not reflect real asset performance, but rather the results of strategic choices by FCDCs and their parent companies. U.K. tax authorities may want to take a closer look at FCDCs' reported performances to establish whether they are the outcome of strategic practices such as income shifting for global profit optimisation purposes.

Original languageEnglish
Pages (from-to)1-17
Number of pages17
JournalJournal of International Accounting, Auditing and Taxation
Issue number1
Publication statusPublished - 2002
Externally publishedYes


  • Foreign-controlled
  • Income shifting
  • Performance
  • Profitability
  • U.K.-controlled

ASJC Scopus subject areas

  • Accounting
  • Finance


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