Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/19076
Authors: 
Mintz, Jack
Weichenrieder, Alfons J.
Year of Publication: 
2005
Series/Report no.: 
CESifo working papers 1612
Abstract: 
The paper analyzes the financial structure of outbound FDI during the period 1996-2002 by drawing on up to 54,022 firm-year observations of 13,758 German-owned subsidiaries. We find that the tax rate in the host country has a sizeable and significantly positive effect on leverage for wholly-owned foreign unlike partially-owned foreign companies. Most of the effect comes from increased intra-company borrowing, while third-party debt is not significantly affected by tax differences. While wholly-owned subsidiaries react more sensitively to tax rate differentials, they are less sensitive to macroeconomic influences like interest rates.
Subjects: 
foreign direct investment
financial structure
capital structure
taxation
JEL: 
H25
F23
Document Type: 
Working Paper

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