Topic: A Study on the Interaction Mechanism of Contract Manufacturing, Intellectual Property, and Corporate Tax Avoidance

Speaker: Junfang DENG

Date &Time: 10:00–11:30, Friday, July 3, 2026

Venue: Room 246, Quanxue Building

Organizers: School of Accounting, Dongbei University of Finance and Economics; Liaoning Provincial Graduate Innovation and Academic Exchange Center for Finance and Accounting in Capital Markets

Abstract: This study examines the role of contract manufacturing in tax-motivated profit shifting by U.S. multinational corporations. We argue that contract manufacturing can help firms avoid allocating their worldwide profits to production activities located in medium- and high-tax manufacturing hubs, thereby facilitating international income shifting. We find that firms using third-party contract manufacturing experience a 1.84 percentage point decrease in their effective tax rate on worldwide income. We also find that contract manufacturing is associated with more outbound profit shifting and greater tax uncertainty. In addition, we find that the association previously identified in prior research between intangible asset intensity and multinational corporate tax savings is almost fully moderated by the presence of contract manufacturing (and vice versa). Our findings provide new insights into how firms achieve effective corporate tax planning and the critical role that contract manufacturing plays in helping firms use intellectual property to obtain favorable tax outcomes.

Introduction of Speaker: Junfang DENG is an Associate Professor in the Department of Accounting at Oregon State University and a New York State Certified Public Accountant (CPA). His main research areas are multinational corporate tax avoidance and profit shifting. His related research has been published in academic journals including Journal of Accounting Research, The Journal of the American Taxation Association, National Tax Journal, Journal of Accounting and Public Policy, and Accounting Horizons.