Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments January, 22 2009 erstellt
Beschreibung:
This paper investigates the determinants of internal debt issued by foreign affliates of multinational corporations. A theoretical analysis discusses the choice of the capital structure in a setting where internal debt can be used to shift taxable profits to low-tax countries and derives testable predictions. Empirical evidence on the tax sensitivity of internal debt is provided using micro-level panel data of virtually all German multinationals made available by the German central bank (Bundesbank). This comprehensive dataset allows us to exploit differences in taxing conditions of 175 countries over a period of ten years. The empirical results confirm a robust impact of tax-rate differences within the multinational group on the use of internal debt, supporting the profit-shifting hypothesis. However, the tax effects are rather small, suggesting that costs related to adjusting the capital structure are substantial