This setting lets you change the way you view articles. You can choose to have articles open in a dialog window, a new tab, or directly in the same window.
Open in Dialog
Open in New Tab
Open in same window

American Economic Journal: Economic Policy: Vol. 6 No. 2 (May 2014)

Expand

Quick Tools:

Print Article Summary
Export Citation
Sign up for Email Alerts Follow us on Twitter Subscription Information
(Institutional Administrator Access)

Explore:

AEJ: Policy - All Issues

AEJ: Policy Forthcoming Articles

Corporate Taxes and Internal Borrowing within Multinational Firms

Article Citation

Egger, Peter, Christian Keuschnigg, Valeria Merlo, and Georg Wamser. 2014. "Corporate Taxes and Internal Borrowing within Multinational Firms." American Economic Journal: Economic Policy, 6(2): 54-93.

DOI: 10.1257/pol.6.2.54

Abstract

This study develops a theoretical model of a multinational firm with an internal capital market. Hypotheses regarding the role of local versus foreign characteristics such as profit tax rates, lack of institutional quality, financial underdevelopment, and productivity for internal debt financing at the level of foreign affiliates are derived and assessed empirically in a panel dataset covering the universe of German multinationals. We show that differences in nontax incentives given by fundamentals in local and foreign markets can offset or reinforce tax incentives. The results point at a many times higher tax-sensitivity of internal debt financing compared to previous research.

Article Full-Text Access

Full-text Article

Additional Materials

Online Appendix (444.12 KB) | Download Data Set (12.79 KB) | Author Disclosure Statement(s) (16.15 KB)

Authors

Egger, Peter (ETH Zurich and CESifo, Munich)
Keuschnigg, Christian (IHS, Vienna and U St Gallen)
Merlo, Valeria (Eberhard Karls U Tuebingen and CESifo, Munich)
Wamser, Georg (Eberhard Karls U Tuebingen and CESifo, Munich)

JEL Classifications

F23: Multinational Firms; International Business
G32: Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
H25: Business Taxes and Subsidies including sales and value-added (VAT)

Comments

View Comments on This Article (0) | Login to post a comment


American Economic Journal: Economic Policy


Quick Tools:

Sign up for Email Alerts

Follow us on Twitter

Subscription Information
(Institutional Administrator Access)

Explore:

AEJ: Policy - All Issues

AEJ: Policy - Forthcoming Articles

Virtual Field Journals


AEA Member Login:


AEAweb | AEA Journals | Contact Us