We address multinational capital structure decisions when firms have varying degrees of financial flexibility for shifting income and/or tax shields between subsidiaries. We find: a) Firms can use leverage to dramatically reduce negative valuation effects from operating in a high-tax country. b)...

For Japan, 1984-2000 includes a major financial liberalization, a stock and real estate market boom followed by a crash, plus the subsequent weakness of most Japanese banks. We examine how Japanese corporations responded in terms of overall leverage, its determinants, and the mix of bank versus...

We address multinational capital structure decisions when firms have varying degrees of financial flexibility for shifting income and/or tax shields between subsidiaries. We find: a) Firms can use leverage to dramatically reduce negative valuation effects from operating in a high-tax country. b)...