Corporation taxes and the debt policy of multinational firms

Buettner, Thiess; Overesch, Michael; Schreiber, Ulrich; Wamser, Georg

doi:10.1007/s11573-011-0520-5

Cited by 9 publications

(3 citation statements)

References 36 publications

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“…In order to attract investment and provide good conditions for entrepreneurship in Sweden, it is important to have a competitive tax rate", available at http://www.government.se/content/1/c6/20/39/65/8bd45b2b.pdf, last accessed on 4/14/2014. tax rate, or tax rate difference (e.g., Desai, Foley, and Hines 2004;Hebous and Weichenrieder 2010;Buettner et al 2011). Additionally, thin-capitalization rules are identified to limit income shifting through financing strategies (e.g., Overesch and Wamser 2010;Buettner et al 2012).…”

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confidence: 99%

Do Corporate Tax Cuts Reduce International Profit Shifting?

Brandstetter

2014

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Applying a difference-in-differences framework with a one-onone matching strategy, which compares earnings of multinational and domestic corporations, I do not find empirical evidence that even a 10 percentage points cut in the business tax rate leads to a reduction of profit shifting activities. Terms of use: Documents in EconStor may

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confidence: 99%

Do Corporate Tax Cuts Reduce International Profit Shifting?

Brandstetter

2014

SSRN Journal

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“…Büttner, Overesch, Schreiber and Wamser (2011) find a positive effect of taxes both on internal and external debt.…”

Section: Introductionmentioning

confidence: 84%

Tax Influence on Financial Structures of M&As

Harendt

2018

SSRN Journal

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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. Abstract: In this paper, I investigate the influence of tax incentives on the financial structures of mergers and acquisitions (M&A) conducted by multinational entities (MNE). Previous research has already found evidence for tax avoidance by debt shifting. I analyze the importance of locating debt at holdings which own the operating firm. Placing debt at the level of the holding is more advantageous since it allows inter alia for debt financing up to the purchase price. Accordingly, by using firm-level data provided by the German Central Bank I show empirically that the probability that a firm is held by a holding in the same country increases with the tax rate in that country (though the effect is rather small). As a limitation, I find this effect only for a sample of all firms and no additional effect in case of M&As (denoted as M&A firms). Since this way of debt financing requires that interest payments of holdings are used to offset profits of the operating firms, I consolidate financial structures of holdings and the operating firms. I discuss theoretically and show with descriptive statistics that this consolidation -the major contribution of my paper -leads to a higher total debt ratio compared to the unconsolidated case. However, this effect can only be observed in particular for the subsample of those M&A firms which actually belong to such structures of holdings and operating firms and does not lead to an increase of the debt ratio in the sample of all M&A firms. Finally, I show that the tax sensitivity of external debt financing increases with the consolidation (though again with no additional effect in case of M&A firms). I conclude that those findings may be one explanation why previous studies have found relatively low effects of taxes on debt financing.

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“…In some cases this influence is taken into account using a bi-nary regression variable that controls for existence or non-existence of loss carryforwards (Ramb and Weichenrieder, 2005;Buettner, Overesch and Wamser, 2011).…”

Section: Literaturementioning

confidence: 99%