Corporate Taxes and Internal Borrowing within Multinational Firms

• 成果类型: Article
• 署名作者: Egger, Peter; Keuschnigg, Christian; Merlo, Valeria; Wamser, Georg
• 署名单位: Swiss Federal Institutes of Technology Domain; ETH Zurich; University of Oxford; University of St Gallen; Centre for Economic Policy Research - UK; Leibniz Association; Ifo Institut; Eberhard Karls University of Tubingen
• 刊物名称: AMERICAN ECONOMIC JOURNAL-ECONOMIC POLICY
• ISSN/ISSBN: 1945-7731
• DOI: 10.1257/pol.6.2.54
• 发表日期: 2014
• 页码: 54-93
• 关键词: fractional response variables; capital-structure choice; cash flow; finance; panel; COMPETITION; INVESTMENT; MARKETS; TRADE; debt

摘要

This study develops a theoretical model of a multinational firm with an internal capital market. Hypotheses regarding the role of local versus foreign characteristics such as profit tax rates, lack of institutional quality, financial underdevelopment, and productivity for internal debt financing at the level of foreign affiliates are derived and assessed empirically in a panel dataset covering the universe of German multinationals. We show that differences in nontax incentives given by fundamentals in local and foreign markets can offset or reinforce tax incentives. The results point at a many times higher tax-sensitivity of internal debt financing compared to previous research.