We present a new model of tax induced transfer pricing as an alternative to the oft-used concealment model. Inspired by interviews with practitioners, we consider a large multinational firm which is audited by the tax authority in the high-tax location. When this country adjusts the transfer...

When a region successfully attracts a large firm by offering tax concessions, outright subsidies etc., the firm often commits itself to performance targets in terms of investment or employment. This paper interprets these contractually fixed targets as a consequence of incomplete information. It...

We present a new model of tax induced transfer pricing as an alternative to the oft-used concealment model. Inspired by interviews with practitioners, we consider a large multinational firm which is audited by the tax authority in the high-tax location. When this country adjusts the transfer...

We analyze the role of business taxation for corporate risk-taking under different accounting principles (such as mark-to-market, lower-of-cost-or-market and historical cost). We demonstrate that conservative accounting may imply incentives to overinvest in risky assets. However, with imperfect...

An increase in the taxation of foreign a¢ liates reduces domestic investment, as has recently been empirically shown in Becker and Riedel (2012). This paper investigates the implication of this ?nding for tax competition. It is shown that an increase in the number of multinational ?rms (in...

We analyse the role of business taxation for corporate risk-taking under different accounting principles. We build a model in which investors have complete information and markets are perfect. A representative risk-neutral firm invests in one unit of an asset choosing from a continuum of assets...

The debate about Germany as a high or low tax country is nourished by the fact that different concepts of measuring the effective tax burden of company profits arrive at contradictory results. Depending on the indicator used, the tax burden of firms is high or low in international comparison. We...

A large part of border crossing investment takes the form of international mergers and acquisitions. In this paper, we ask how optimal repatriation tax systems look like in a world where investment involves a change of ownership, rather than a reallocation of real capital. We find that the...

This paper deals with the impact of electoral competition on politicians´ outside earnings. We propose a simple theoretical model with politicians facing a tradeoff between allocating their time to political effort or to an alternative use generating outside earnings. The model has a testable...