In this article we use contingent-claim analysis to calculate the effective tax rate (ETR) under corporate debt finance …. In particular, we deal with both pure debt and two of the most well-known hybrid securities, i.e., convertible, and … reverse convertible bonds. We show that: 1) effective taxation crucially depends on the characteristics of debt, and 2 …

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. …

Tax provisions favoring corporate debt over equity finance ("debt bias") are widely recognized as a risk to financial … amount, affect corporate debt ratios and mitigate financial stability risk. We find that rules targeted at related party … borrowing (the majority of today's rules) have no significant impact on debt bias - which relates to third-party borrowing. Also …

multinational groups. We model the trade-off between the use of external debt, parental debt and an internal bank. We test the …: (i) smaller firms often rely on parental debt financing; (ii) larger multinationals are more likely to use internal banks …; (iii) parental debt and external debt are substitutes and the mix depends on the relative cost of raising capital through …

-owned affiliates. Second, the debt financing of partially-owned affiliates is less sensitive to the tax rate suggesting that partially …-owned affiliates rely less on international debt shifting than wholly-owned affiliates. This indicates that partially-owned affiliates …

) countries over the time period 2002-2012. Our results show a significant impact of the net tax benefit of debt on the debt ratio … of firms. Ignoring firm heterogeneity, an increase in the net tax benefit of debt by 10 percentage points leads to an … increase in the debt ratio of 2.49 percentage points. Taking into account investor-level taxation and firm heterogeneity, an …

Multinational companies can exploit the tax advantage of debt more aggressively than national companies by shifting … debt from affiliates in low tax countries to affiliates in high tax countries. Previous papers have either omitted internal … debt or external debt from the analysis. We are the first to model the companies' choice between internal and external debt …