This paper presents a rationale of why and under what economic environment the corporate income tax should exist, in particular, as a form of double taxation. In this sense, we suggest the tax code similar to those in the real world, however, ours turns out to be informationally much more...

This paper examines the interaction between income diversion and firm performance. Using unique Russian banking transaction data, I identify 42,483 spacemen, fly-by-night firms created specifically for income diversion. Next, I build a direct measure of income diversion for 45,429 companies and...

In this study we investigate the impact of the thin capitalization rule (TCR), introduced in Germany in 2008, on firms' capital structure, investment and profitability. The identification of the causal effects is based on the escape clauses in the regulation using a difference-in-difference...

In intra‐group finance hybrid instruments allow for tailor‐made form of finance. Hence hybrid finance is often used for international tax planning in multinational groups.Due to a lack of international tax harmonization or tax coordination qualification conflict can arise. A specific hybrid...

Product market power provides firms with comparative advantages through more persistent profitability and insulation from competitive threats. These advantages likely provide firms with the ability to engage in greater tax avoidance. We present evidence consistent with this hypothesis. We also...

We analyze how interactions between corporate taxation and corporate governance affect shareholder capital. Using a model with strategic interaction between managers and outside shareholders, we hypothesize that, while an increase in the corporate tax rate decreases shareholder capital, an...

Recently, some European Union member states implemented corporate tax rules restricting the deductibility of interest payments. Most prominently, Denmark extended its thin capitalization rule by an interest stripping rule restricting a firm's interest deductions to 80 percent of EBIT. Similar...

This paper investigates tax planning behavior by means of inter-company finance and the effectiveness of fighting back via thin-capitalization rules. A simple theoretical model, which considers the financing decision of a multinational company, is used to obtain empirical implications. The...

Do corporate tax avoidance activities advance shareholder interests? This paper tests alternative theories of corporate tax avoidance that yield distinct predictions on the valuation of corporate tax avoidance. Unexplained differences between income reported to capital markets and to tax...

Taxation and corporate governance interact in various ways. Tax law influences corporate governance structures in companies by offering tax privileges or imposing penalties. On the other hand actual corporate governance structures in place have an impact on the way companies manage their tax...