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The Impact of Thin Capitalization Rules on the Location of Multinational Firms' Foreign Affiliates

Merlo, Valeria; Riedel, Nadine; Wamser, Georg - 2015

This paper examines how restrictions on the tax-deductibility of interest cost affect location choices of multinational corporations (MNCs). Many countries have introduced so-called thin-capitalization rules (TCRs) to prevent MNCs from shifting tax base to countries with lower tax rates. As of...

Persistent link: https://www.econbiz.de/10011307106

What drives corporate tax rates down?: a reassessment of globalization, tax competition, and dynamic adjustment to shocks

Overesch, Michael; Rincke, Johannes - 2009

We reassess the driving forces behind the recent decline of corporate tax rates in Europe. Using data for up to 32 countries from 1983 to 2006, we analyze the role of economic and financial openness as well as tax competition while allowing for dynamic adjustment to shocks and period-specific as...

Persistent link: https://www.econbiz.de/10010264548

Tax rate and tax base competition for foreign direct investment

Egger, Peter; Raff, Horst - 2011

This paper argues that the large reduction in corporate tax rates and only gradual widening of tax bases in many countries over the last decades are consistent with tougher international competition for foreign direct investment (FDI). To make this point we develop a model in which governments...

Persistent link: https://www.econbiz.de/10010278857

Taxes, Incorporation, and Productivity

Barro, Robert J. - 2019

U.S. businesses can choose to be C-corporations or pass-through entities in the forms of S-corporations, partnerships (notably LLCs), and sole proprietorships. C-corporate status conveys benefits from perpetual legal identity, limited liability, potential for public trading of shares, and...

Persistent link: https://www.econbiz.de/10012892096

Charitable Constributions by Businesses : A Tax Policy Perspective

Blumkin, Tomer - 2019

Empirical evidence suggests that charitable contributions to public goods by businesses may be driven not only by the familiar warm-glow of giving motive but also as a means for businesses to signal high product quality. Building on this finding, we present an analytical framework that...

Persistent link: https://www.econbiz.de/10012861436

Corporate Taxation and Financial Strategies Under Asymmetric Information

Cohen, Francesco; Fedele, Alessandro; Panteghini, Paolo - 2014

In this article we study the corporate tax effects on credit market equilibria. In particular, we develop a model that accounts for five pieces of evidence: i) the existence of a tax incentive to borrow, ii) the negative relationship between leverage and profitability, iii) the existence of...

Persistent link: https://www.econbiz.de/10010352406

Accelerated Depreciation, Default Risk and Investment Decisions

Panteghini, Paolo; Vergalli, Sergio - 2016

In this article we focus on a representative firm that can decide when to invest under default risk. On the one hand, this firm can benefit from generous tax depreciation allowances, on the other hand it faces a default risk. Our aim is to study the effects of tax depreciation allowances in a...

Persistent link: https://www.econbiz.de/10011431255

Firms' Financing Dynamics around Lumpy Capacity Adjustments

Görtz, Christoph; Sakellaris, Plutarchos; Tsoukalas, … - 2022

or employment. Using U.S. firm level data, we document systematic patterns of cash and debt financing around lumpy … productivity are leading indicators of the lumpy adjustment. Cash and debt capacity are actively manipulated, and contribute … debt. During and after contractions, firms rebuild cash and reduce debt growth significantly in a concerted effort to …

Persistent link: https://www.econbiz.de/10013427763

The Tax Sensitivity of Debt in Multinationals: A Review

Schjelderup, Guttorm - 2015

multinational firms show that the tax sensitivity of debt is more modest than what one would expect given the incentives for profit … that pertains to the use of debt. …

Persistent link: https://www.econbiz.de/10011388269

Thin Capitalization Rules and Multinational Firm Capital Structure

Blouin, Jennifer; Huizinga, Harry; Laeven, Luc; … - 2014

, restrictions on an affiliate’s debt-to-assets ratio reduce this ratio on average by 1.9%, while restrictions on an affiliate … affiliate’s debt to assets ratio by 0.8%, which shows that rules targeting internal leverage have an indirect effect on the …

Persistent link: https://www.econbiz.de/10010352370

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