“…Our results capture the tax-optimized setting of e.g., transfer prices and financing structures among producing affiliates, not the purely artificial shifting of book profits to zero-tax havens. A second reason for this finding may be that statutory tax rates do not capture profit shifting incentives well, for example because our sample includes a large number of lossmaking affiliates (see Simone et al, 2017;Hopland et al, 2018;Gamm et al, 2018). Moreover, host country may offer specific tax incentives, including company-specific advance pricing agreements or country-specific double tax treaty networks, which are not reflected in the statutory tax rate.…”