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The Capital Structure of Multinational Companies under Tax Competition

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  • Paolo Panteghini

Abstract

This article studies the relationship between debt policies of multinational companies (MNCs) and governments’ tax strategies. In the first part, it is shown that the ability to shift income from high- to low-tax countries affects MNCs’ financial choices. In the second part we show how MNCs’ financial decisions can affect the tax strategies of two governments competing to attract income.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2006/wp-cesifo-2006-05/cesifo1_wp1721.pdf
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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1721.

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Date of creation: 2006
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Handle: RePEc:ces:ceswps:_1721

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Keywords: capital structure; country risk; default; multinationals; tax competition;

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