Abstract. Meta-regression analysis (MRA) can provide objective and comprehensive summaries of economics research. Their use has grown rapidly over the last few decades. To improve transparency and to raise the quality of MRA, the meta-analysis of economics research-network (MAER-Net) has created the below reporting guidelines. Future meta-analyses in economics will be expected to follow these guidelines or give valid reasons why a meta-analysis must deviate from them.

Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW.Download this ZEW Discussion Paper from our ftp server:ftp://ftp.zew.de/pub/zew-docs/dp/dp08128.pdf Non-technical summaryDespite the continuing political interest in the usefulness of tax competition and tax coordination as well as the wealth of theoretical analyses, it still remains open whether or when tax competition is harmful. Moreover, the influence of tax differentials on multinationals' decisions is still insufficiently analyzed. Thus, economists have increasingly resorted to empirical analysis in order to gain insights on the elasticity of foreign direct investments (FDI) with respect to company taxation. As a result, the empirical literature on taxation and international capital flows has grown to a similar abundance during the last 25 years as the respective theoretical literature. Its heterogeneity leads to a rising need for concise reviews on the existing empirical evidence. In this paper we extend former meta-analyses on FDI and taxation in three ways. First, we add the most recent publications unconsidered in meta-analyses up-todate. Second, we apply a different methodology by using a broad set of meta-regression estimators and explicitly discuss which one is most suitable for application to our meta-data.Third, we address some important issues in research on FDI and taxation to the clarification of which meta-analysis can make valuable contributions. These issues are mainly: The influence of variables which might moderate effects of tax differentials (e.g. public spending), the implications of using aggregate FDI data as opposed to firm-level information on measured tax effects, the implications of bilateral effective tax rates, and the possible presence of publication bias in primary research.According to our meta-analysis, a pooled effect based on the median result taken from each primary study could be obtained that amounts to a semi-elasticity for company taxes on FDI (percentaged reaction of FDI to one percentage point change in the tax burden) of 1.68 in absolute terms.We do not find overwhelming support for publication bias in the meta-regressions. The use of aggregate data leads to higher estimated semi-elasticities, but significantly reduces t-values and thus implies less precise estimates. Regarding the choice of tax rates, unilateral effective average tax rates do not lead to significantly higher tax effect size estimates or significances as compared to the statutory rate. Bilateral tax rates best capture tax incentives and yield both s...

Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW. Non-technical summaryThe public debate on tax base erosion by multinational enterprises (MNEs) has been stirred up by strikingly low effective tax rates (ETRs) of some very prominent US-American information technology companies. Going beyond such anecdotal insights, numerous empirical studies provide general evidence for profit shifting by confirming a negative correlation between reported parent or subsidiary profits and local tax levels. Given the current state of research, the existence of profit-shifting behavior is largely unquestioned. Nevertheless, there is much lower a consensus about the scale of the profit-shifting activity and its responsiveness to the crosscountry tax differential allowing for tax arbitrage.The objective of this paper is to add to the current state of research and debate in two ways.First, we provide a consensus estimate of the size of the tax-rate elasticity of reported parent or subsidiary profits and explain which factors determine the variation in previous empirical findings. Second, we investigate which of the profit-shifting channels generally distinguished, financial structures or transfer pricing, is more important. To this end, we conduct a meta-analysis of the complete literature in both public economics and accounting research that estimates the tax sensitivity of interest.On the basis of the existing evidence, we predict a tax semi-elasticity of pre-tax profit of about 0.8, in absolute terms. Hence, reported profits decrease by about 0.8% if the international tax differential that can be exploited for tax arbitrage increases by 1 percentage point. Moreover, our findings suggest that transfer pricing and licensing, not inter-company debt, is indeed the dominant profit-shifting channel. Das Wichtigste in Kürze ABSTRACTThis paper provides a quantitative review of the empirical literature on profit-shifting behavior of multinational firms. We synthesize the evidence from 25 studies and find a substantial response of profit measures to international tax rate differentials. Accounting for misspecification biases by means of meta-regressions, we predict a tax semi-elasticity of subsidiary pre-tax profits of about 0.8. Moreover, we disentangle the tax response by means of financial planning from the transfer pricing and licensing channel. Our results suggest that transfer pricing and licensing are the dominant profit-shifting channel.

Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW.Download this ZEW Discussion Paper from our ftp server:http://ftp.zew.de/pub/zew-docs/dp/dp11075.pdf Non-Technical SummaryTheoretical arguments for the tax sensitivity of capital structures are convincing. Empirical findings instead have for years been rather weak. Even today, despite a surge of studies providing point estimates for the tax effect on corporate capital structure, the empirical evidence remains ambiguous. Surprisingly, however, no study has ever quantitatively examined the factors which determine the variation in empirical evidence.The contribution of this paper is to fill this gap. It provides a comprehensive quantitative review of the empirical literature on the impact of taxation on corporate debt financing. Synthesizing the evidence from over 1,000 primary estimates extracted out of 46 studies, we find that this impact is indeed quite substantial. Our results suggest that, in particular, the tax rate proxy used for identification determines the outcome of primary analyses. More refined measures like the simulated marginal tax rate suggested by Graham (1996Graham ( , 1999) avoid a significant downward bias in estimates for the debt response to tax. Moreover, we find that debt characteristics, the econometric specification, the set of control-variables, and publication selection in primary studies exert significant influence on estimated tax effects. Accounting for all potential misspecification biases by means of meta-regression analyses, we predict a marginal tax effect on the debt ratio of 0. ABSTRACTThis paper provides a quantitative review of the empirical literature on the tax impact on corporate debt financing. Synthesizing the evidence from 46 previous studies, we find that this impact is substantial. In particular, the tax rate proxy determines the outcome of primary analyses. Measures like the simulated marginal tax rate (Graham (1996a)) avoid a downward bias in estimates for the debt response to tax. Moreover, debt characteristics, econometric specifications, and the set of control-variables affect tax effects. Accounting for misspecification biases by means of meta-regressions, we predict a marginal tax effect on the debt ratio of 0.3.

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