IDEAS home Printed from https://ideas.repec.org/a/eej/eeconj/v32y2006i4p685-698.html
   My bibliography  Save this article

Taxation and Ownership Structure in Supplying Foreign Markets

Author

Listed:
  • Kostas Axarloglou

    () (Democritus University of Thrace)

  • Frank G. Meanor, Jr.

    (Boston University)

Abstract

We examine the impact of taxation on foreign direct investment (FDI) flows. Previous research has focused on the impact of the corporate income taxes on aggregate FDI flows. We contribute in the relevant literature in three areas. First, the flows of FDI are classified in two categories according to parent company’s share of ownership of its foreign subsidiary receiving the FDI flow: FDI to majority owned (MOS) and to minority owned subsidiaries (MIS). Second, three different taxation schemes in the host country are considered: the corporate income taxes, the capital gains taxes and the dividend withholding taxes. Third, we study the interactive impact of multiple taxations on FDI flows. Our empirical results indicate that both individually and interactively, the three tax rates have a strong and statistically significant impact on FDI flows to MOS and a much weaker impact on FDI flows to MIS.

Suggested Citation

  • Kostas Axarloglou & Frank G. Meanor, Jr., 2006. "Taxation and Ownership Structure in Supplying Foreign Markets," Eastern Economic Journal, Eastern Economic Association, vol. 32(4), pages 685-698, Fall.
  • Handle: RePEc:eej:eeconj:v:32:y:2006:i:4:p:685-698
    as

    Download full text from publisher

    File URL: http://web.holycross.edu/RePEc/eej/Archive/Volume32/V32N4P685_698.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. James R. Hines, Jr., 1996. "Tax Policy and the Activities of Multinational Corporations," NBER Working Papers 5589, National Bureau of Economic Research, Inc.
    2. Jason Cummins & R. Glenn Hubbard, 1995. "The Tax Sensitivity of Foreign Direct Investment: Evidence from Firm-Level Panel Data," NBER Chapters,in: The Effects of Taxation on Multinational Corporations, pages 123-152 National Bureau of Economic Research, Inc.
    3. Rosanne Altshuler & Harry Grubert & T. Scott Newlon, 2000. "Has U.S. Investment Abroad Become More Sensitive to Tax Rates?," NBER Chapters,in: International Taxation and Multinational Activity, pages 9-38 National Bureau of Economic Research, Inc.
    4. Michael J. Boskin & William G. Gale, 1987. "New Results on the Effects of Tax Policy on the International Location of Investment," NBER Chapters,in: The Effects of Taxation on Capital Accumulation, pages 201-222 National Bureau of Economic Research, Inc.
    5. Steven Cassou, 1997. "The link between tax rates and foreign direct investment," Applied Economics, Taylor & Francis Journals, vol. 29(10), pages 1295-1301.
    6. Deborah L. Swenson, 2000. "Transaction Type and the Effect of Taxes on the Distribution of Foreign Direct Investment in the United States," NBER Chapters,in: International Taxation and Multinational Activity, pages 89-112 National Bureau of Economic Research, Inc.
    7. Campa, Joe Manuel, 1993. "Entry by Foreign Firms in the United States under Exchange Rate Uncertainty," The Review of Economics and Statistics, MIT Press, vol. 75(4), pages 614-622, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Opp, Marcus M., 2012. "Expropriation risk and technology," Journal of Financial Economics, Elsevier, vol. 103(1), pages 113-129.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eej:eeconj:v:32:y:2006:i:4:p:685-698. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Victor Matheson, College of the Holy Cross). General contact details of provider: http://edirc.repec.org/data/eeaa1ea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.