Why is the Response of Multinationals' Capital-Structure Choice to Tax Incentives That Low? Some Possible Explanations
AbstractThis paper evaluates three possible explanations for why empirical studies have found a quite moderate response of multinationals' capital structure to tax incentives. Firstly, by concentrating on debt decisions by operating subsidiaries, previous studies may have overlooked the importance of holding companies. Secondly, international transfer-pricing guidelines may reduce the tax incentives for debt financing. And thirdly, debt as a tax planning tool may be especially used by large multinationals. Whereas I do not find empirical evidence in favor of the third hypothesis, I do find empirical evidence for the first and the second hypothesis.
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Bibliographic InfoArticle provided by Mohr Siebeck, Tübingen in its journal FinanzArchiv.
Volume (Year): 67 (2011)
Issue (Month): 2 (June)
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Find related papers by JEL classification:
- H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
- G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
- M41 - Business Administration and Business Economics; Marketing; Accounting - - Accounting - - - Accounting
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
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- Peter Egger & Christian Keuschnigg & Valeria Merlo & Georg Wamser, 2014.
"Corporate Taxes and Internal Borrowing within Multinational Firms,"
American Economic Journal: Economic Policy,
American Economic Association, vol. 6(2), pages 54-93, May.
- Peter Egger & Christian Keuschnigg & Valeria Merlo & Georg Wamser, 2012. "Corporate Taxes and Internal Borrowing within Multinational Firms," NBER Working Papers 18415, National Bureau of Economic Research, Inc.
- Peter Egger & Christian Keuschnigg & Valeria Merlo & Georg Wamser, 2012. "Corporate Taxes and Internal Borrowing within Multinational Firms," Working Papers 1221, Oxford University Centre for Business Taxation.
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