Charting New Waters: Submarine Cables and Multinationals' Activities in Tax Haven Islands

This paper investigates whether advances in information and communication technologies facilitate global tax avoidance. Specifically, it analyzes the impact of the staggered deployment of submarine cables in tax haven islands on the behavior of US‐listed corporations. Using a difference‐in‐differences framework, the study finds that companies were significantly more likely to disclose subsidiaries in tax haven islands following the installation of submarine cables in these jurisdictions. The findings suggest that digital connectivity has enhanced the accessibility of tax haven islands, thereby enabling firms to more effectively exploit international tax differentials and anchor profits in offshore financial centers.