Value Relevance of the Information Reported by Romanian Quoted Companies with Connections to Tax Havens

Financial information reported by companies is an element that completes the set of data necessary to optimize the investment decisions. The extent to which they contribute to the formation of the share price (value relevance) reflects both the qualitative level of the accounting figures and the degree of efficiency and maturity of the capital markets. The existence of connections to offshore jurisdictions may influence investors’ perception of the quality of reported information. This chapter aims to analyze the value relevance of the information reported by the listed companies on the main section of the BSE, focusing on the results obtained by the entities with connections to tax havens. To achieve the research objectives, we used financial information for a period of six fiscal years (2011–2016). The value relevance estimation was achieved through the two econometric models established in the literature, the Easton and Harris model and the Ohlson model. The findings of our research show a low value relevance for companies with connections to tax havens compared to those without such links. The relationship is also sustained by robustness tests carried out by introducing control variables to highlight the characteristics of companies with offshore connections: performance, indebtedness, asset structure, productivity, and taxation.